The report said that China's economy had weak momentum over the past year, and demand for construction and road-building materials declined accordingly. However, after a downturn in the first half of the year, Chinese steel prices have rebounded since late June, and sales of cement and construction machinery have also improved. At the same time, other signs also indicate that the Chinese economy has bottomed out and is recovering.

　　The pickup in economic activity has further strengthened confidence in China's short-term growth prospects, but it has also raised concerns that the economy will become more dependent on capital expenditure. Signs of recovering sales and prices have appeared throughout the construction industry. Cement prices have rebounded since June. In addition, although summer is usually a slack season for construction due to high temperatures, cement sales in July and August were still strong. The construction equipment industry has also shown signs of emerging from a two-year slump.

　　Fu Weiqi, an analyst at UBS, said the actual recovery in the machinery industry is better than the data suggest; sales of low-priced equipment and heavy trucks are booming, and finished-product inventories are declining. He expects machinery and equipment sales to gradually accelerate in the second half of this year.

　　However, regarding the rebound in steel company profits, market participants said overcapacity and debt problems will continue to put pressure on the balance sheets of many steel companies. The report also said that an executive of Shagang Group, China's largest private steel company, said that because of concerns about losing market share or banks suspending lending, many steel companies are unwilling to cut production even when struggling. Therefore, although the steel market situation has improved, steel companies' profit margins remain thin.