UBS: China Construction and Building Materials: Slow Post-Holiday Resumption, Momentum Building into Late March
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UBS partnered with construction data provider 100NJZ to assess post-Lunar New Year construction resumption progress. Overall resumption rates slowed during the second week, with southern China outpacing the north. Infrastructure activity slightly exceeded property construction, though the disparity remains narrow. Total project volumes have declined, driven by a significant contraction in residential projects as private developers exit the market.
Resumption rates and funding availability remained broadly flat year-over-year at 23.5 percent and 35.5 percent respectively, signaling a sluggish restart. Eastern and southwestern regions demonstrated the strongest momentum, while northern and central areas lagged due to regulatory and funding constraints. Urban renewal and major government-backed infrastructure projects, particularly railways and water conservancy, are leading the recovery.
This slow rebound has pressured building material prices. Cement prices fell 13 percent year-over-year, dropping approximately 50 yuan per ton, with margin proxies compressing by 26 percent. Conversely, rebar steel profitability remained relatively stable, supported by production cuts and low inventory levels since late 2025.
Industry experts anticipate construction activity will accelerate during weeks three and four. Some material suppliers are optimistic about mid-to-late March and plan to raise prices around March 9. Given this environment, UBS maintains a selective approach to the construction sector. The firm favors diversified building material companies like China National Building Material over pure cement producers, citing greater cross-cycle earnings resilience.