Machinery / Industrial Parts & Tools

Mining, as one of the three main application fields of excavators, accounts for about 20% of sales, of which coal mining accounts for about 50% of the demand for large excavators.

In the first half of this year, the revenue and profits of my country's mining industry have grown rapidly. At the same time, with the acceleration of decarbonization and energy transformation, the global demand for minerals such as lithium and cobalt has grown significantly, superimposed on the global mining industry's expectations for new energy products. The demand for excavators, especially the international trade market, brings new opportunities. Domestic large excavators are entering the global market by virtue of their advantages in price, business policies and supporting facilities.

The domestic mining industry is highly prosperous, with a substantial increase in profits

According to the National Bureau of Statistics, in the first half of this year, the added value of industries above designated size increased by 3.4% year-on-year. Among them, the added value of the mining industry increased by 9.5% year-on-year. In terms of investment and profit, the investment in the mining industry increased by 9.8% in the first half of the year, and the total profit was 382.11 billion yuan, a year-on-year increase of 1.33 times, maintaining a rapid growth.

Since the beginning of this year, with the continuous advancement of my country's energy supply and price stability, it has driven the growth of the added value of the mining industry. Among them, in the second quarter, the added value of the mining industry increased by 8.4% year-on-year, and the growth rate of the coal mining and washing industry exceeded double digits, which were significantly faster than the growth of all industries above designated size. At the same time, the growth rate of raw coal production accelerated. In the first half of this year, 2.19 billion tons of raw coal were produced, an increase of 11.0% year-on-year. In June, the production of raw coal was 380 million tons, a year-on-year increase of 15.3%, and the growth rate was 5.0 percentage points higher than that in May.

The continued high growth of profits in the mining industry has released positive signals for mining machinery including large excavators. However, contradicting the growth of investment in the mining industry, the sales volume of large excavators in China has continued to decline.

The cycle is down, and the domestic sales of large excavators continue to decline

According to the statistics of China Construction Machinery Industry Association, from January to June 2022, the domestic market of large excavators (≥28.5t) sold a total of 10,341 units, a year-on-year decrease of 52.7%, accounting for about 11.35% of the total domestic excavator sales.

In fact, the decline in sales of large excavators is mainly due to the influence of cyclical factors. Excessive inventory leads to the release of demand and cannot get immediate feedback. On the whole, the decline in sales of large excavators in the first half of 2022 has gradually narrowed since March, and is lower than the overall level of the industry. Among them, the sales volume in March fell by 62.50% year-on-year, and the sales volume in June fell by 31.70% year-on-year, and the decline was significantly narrowed. This also shows that the high prosperity of the mining industry still has a significant boosting effect on large excavators.

It is worth mentioning that the product performance and reliability of domestic brand large-scale excavators, super-large excavators and other mining machinery are growing rapidly, and by virtue of a series of advantages such as price, maintenance guarantee, spare parts supply, etc. Seize the market share of foreign brands in the large and super large excavator market. Among them, in 2020, the proportion of domestic large excavators has reached 57%, and the proportion of sales in 2021 and 2022 is expected to increase further.

At the same time, in the international trade market, foreign large excavators are also ushering in more market opportunities.

New energy boosts the global mining industry, and the export of construction machinery is good

According to the "China Mining Engineering Construction Industry Development Trend Analysis and Investment Prospect Forecast Report (2022-2029)" released by Guanyan Report Network, in recent years, under the support of the popularization of new energy vehicles and the promotion of the carbon neutrality roadmap, the The demand for non-ferrous metals represented by copper is increasing.

According to the "Global Mining Outlook 2022" released by KPMG, which surveyed more than 300 industry executives from 23 major markets, 62% of the respondents are confident in their companies' growth prospects in the next 24 months. While the figure was down slightly from last year's survey (66%), it reiterated that volatility in commodity prices, combined with broader geopolitical and Covid-19 uncertainty, had not dampened market optimism. Although highly volatile, due to huge growth in demand for minerals including lithium, cobalt and graphite. These are all important parts of the global decarbonization journey

According to forecasts, global demand for minerals such as lithium, cobalt, and graphite is expected to grow tremendously as decarbonization and energy transition accelerate.

In response to the growing demand in the international trade market, domestic excavator brands have already vigorously promoted the development of the international trade market, and overseas sales are continuing to rise. Among them, Indonesia is the world's largest nickel producer. The demand for nickel in pure electric vehicle (EV) batteries is increasing, which has also increased the demand for construction machinery developed by Indonesian nickel mines. At present, domestic brands represented by SANY are competing with foreign brands in the Indonesian market and have strong competitiveness. Among them, SANY excavators have a market share of about 21% in Indonesia.

In the first half of this year, Liugong also overcame the difficulties of the epidemic and overseas logistics, and achieved remarkable results in its continuous efforts in large-scale digging and super-large digging. Since the beginning of the year, the news of the batch delivery of excavators has been heard endlessly. On April 26, nearly 300 excavators in ten batches were sent to construction sites around the world under the witness of all the guests.

It can be seen that the global market demand for China's large excavators is rising.

The innovation of mining technology will release the demand for electrified products

At the same time, KPMG's "Global Mining Outlook 2022" mentioned that nearly half of mining executives (46%) believe that technological innovation will be the source of major industry disruption in the next three years, and almost all of them are determined to seize this opportunity. Adopting new energy technologies can help mining companies reduce carbon emissions from their operations.

As the first country to deploy and vigorously promote new energy construction machinery, my country's new energy, especially electrified construction machinery, has a first-mover advantage in the world. The global mining industry is optimistic about new energy construction machinery, which will inevitably drive domestic electric construction machinery to go out National gate, compete on a bigger stage.

To sum up, the global mining industry is ushering in more new changes and opportunities, and the domestic mining industry is also ushering in a new period of demand growth in the international trade market. We also need to look at competition and development with a brand-new mentality, and expect more breakthroughs in technology and witness the birth of more miracles while the sales of domestic digging and super digging increase.