Machinery / Industrial Parts & Tools

On November 7, China Construction Machinery Industry Association released the sales report of main products in the construction machinery industry in October 2022. According to the statistics of the association on 26 excavator manufacturers, 20501 excavators of all kinds were sold in October, up 8.1% year on year.

Driven by the stable growth policy, the domestic capital construction commencement rate has rebounded, and the demand of international trade market has increased. After entering the third quarter, the sales of construction machinery in China has resumed positive growth. Lv Ying, Deputy Secretary General of China Construction Machinery Industry Association, said that in the past four months, the sales data of the construction machinery industry has gradually improved, and the supporting role of the domestic construction machinery industry chain to the world construction machinery industry chain has further strengthened. Looking forward to the fourth quarter, the construction machinery industry is expected to continue to recover, but whether the inflection point has formed remains to be seen.

The market is gradually warming up

In the first half of this year, the demand for construction machinery such as excavators was under pressure in the short term due to the downward impact of infrastructure construction. However, after entering the third quarter, the marginal improvement was ushered in.

In October, according to the statistics of 26 excavator manufacturers by China Construction Machinery Industry Association, 20501 excavators of all kinds were sold, up 8.1% year on year, including 11350 excavators in China, down 9.91% year on year; 9151 sets were exported, up 43.8% year on year. According to the statistics of 22 loader manufacturers, 9448 loaders of various types were sold in October 2022, up 1.85% year on year. Among them, 6304 sets were sold in the domestic market, down 5.98% year on year; The export sales volume was 3144 sets, up 22.3% year on year.

"The recovery of positive growth of construction machinery is driven by multiple factors, among which the national growth stabilization policy has played a great role." Lu Ying said that the national growth stabilization policy has been issued many times since this year, which has formed a key supporting role in promoting the development of the entire industry.

From the supply side, the upstream of the construction machinery industry mainly includes steel, hydraulic parts, engines and other raw materials and core components. The price fluctuation of steel and other raw materials directly affects the production cost of construction machinery. In the first half of the year, the overall steel price showed a trend of "rising and falling", which helped to improve the efficiency of construction machinery manufacturing enterprises and enhance the enthusiasm of enterprises in production.

From the demand side, the construction machinery industry is greatly affected by downstream infrastructure construction, real estate construction and coal mining. In the first half of the year, many projects were delayed due to the frequent occurrence of the COVID-19 and high temperature power rationing in many places.

After the third quarter, China's infrastructure investment accelerated. According to the "CCTV Finance Excavator Index" jointly created by CCTV Finance, Sany Heavy Industry and Shugen Internet, the operating rate of various types of machinery and equipment remained at a high level in the third quarter, and the average monthly operating rate of construction machinery in the third quarter was 64.76%, higher than 53.98% of the average monthly operating rate in the first quarter.

"After entering the second half of the year, many enterprises began to catch up to ensure the completion of the whole year's construction progress." Yuan Xuezheng, a researcher at the Machinery Think Tank, said that although the external environment of construction machinery this year is not as good as last year, there are still some positive factors. For example, the investment in the mechanical and electrical industry is expanding, the demand of overseas markets is increasing, and the demand for upgrading brought by environmental protection and technology has all driven the sales of construction machinery.

Export sales exceed domestic sales

On October 25, Sany Heavy Industry announced that from January to September, the company achieved international sales revenue of 25.88 billion yuan, up 43.7% year on year, 10.8 percentage points faster than the first half of the year. Among them, the sales revenue of Asia and Australia reached 11.595 billion yuan, up 52.3%; The European region achieved sales revenue of 7.517 billion yuan, up 26.5%; The sales revenue of the Americas region reached 4.846 billion yuan, up 63.5%; The sales revenue in Africa was 1.92 billion yuan, up 29%.

The head of Sany Heavy Industry said that the global market share of Sany Mining Machinery has increased rapidly, and the international trade market share has exceeded 8%; In the United States, the United Kingdom, Italy, Brazil, Canada and other overseas machinery markets, the sales revenue has achieved a rapid growth of more than 60%.

XCMG, another leading construction machinery enterprise, also adheres to the international strategy. XCMG's various products have a wide range of global export sales, with international revenue accounting for more than 50%.

"The share of domestic construction machinery enterprises in the international trade market has increased a lot compared with two years ago." Yuan Xuezheng also said that under the condition that domestic demand is not particularly booming, exports have largely smoothed the domestic cycle.

Since the third quarter, construction machinery as a whole has been able to return to positive growth, and export growth has indeed played an important role. In the first nine months of this year, the export sales of excavators in China were 80000 sets, up 70.5% year on year. In September, the export sales of excavators exceeded the domestic sales for the first time, accounting for 50.35%.

"The situation of export exceeding domestic sales is unprecedented in many years," Lu Ying said. According to customs statistics, the export of construction machinery in July, August and September this year continued to exceed 4 billion dollars.

In the past, there was a strong brand inertia in the international construction machinery market. International brands have been deeply cultivated in some regional markets for many years, and it is difficult for domestic enterprises to enter major markets. But this pattern is changing. At present, many foreign construction machinery enterprises are faced with problems such as uncontrollable production costs, incomplete industrial chain, long supply cycle, and great difficulty in shipment. The product supply has been greatly reduced, giving our construction machinery enterprises the opportunity to expand the international market.

Yuan Xuezheng believes that the demand of foreign markets does exist, but the export growth is mainly due to the active layout of domestic leading enterprises in technology research and development, industrial chain and international market. China's construction machinery enterprises have advantages in electrification and digitalization, strong industrial tenacity and high cost performance, effectively seizing the opportunity to enter the international market.

"The domestic industrial chain plays a prominent role in supporting the international construction machinery industrial chain." Lu Ying said that the export volume increased not only for the complete machine, but also for the parts and components.

Take Brazil as an example. In the past, the export market of construction machinery in China ranked more than ten, and it entered the top ten in the third quarter. Nearly half of its imported construction machinery products are parts. The "integration" and "zero" export have enabled domestic construction machinery enterprises to achieve leapfrog development in non-traditional advantageous markets.

Lv Ying said that if the export volume of domestic construction machinery can achieve sustained growth, it will contribute to the restructuring of the international market pattern of the whole construction machinery.

It is expected to grow steadily

On November 4, Liugong's national fourth series products were unveiled at the commencement ceremony of Liugong's Central China Industrial Base project and Liugong's comprehensive solutions conference. It is reported that at present, Liugong has completed the "national fourth" environmental protection filing for 28 types of loaders, 31 types of excavators, more than 10 types of bulldozers, graders and other construction machinery and equipment.

From December 1, the construction machinery industry will officially enter the era of "national fourth" emission standards. How will it affect the sales of construction machinery industry in the short term?

"Although the previous two emission standards upgrades did bring about great fluctuations, this time it is not necessarily." Lu Ying said that the entire market's expectations for environmental protection emission upgrades have changed, and the impact of the new emission standards may not be very large.

Speaking of the trend of electrification and intellectualization of construction machinery, Lv Ying believes that China has great advantages in relevant fields. But in the long run, there are still some technical and service difficulties to overcome. In the future, with the accumulation of enterprise technology, electric construction machinery is expected to achieve accelerated development in the next two to four years.

Looking forward to the future, as a strong cyclical industry, does this round of performance recovery mean that the cycle has gradually bottomed out?

"The situation of the whole construction machinery industry is improving, but the specific extent of improvement still needs further observation." Yuan Xuezheng believes that the domestic market and the international market are in different industry cycles, and the main role of exports is to smooth the domestic cycle through the international market, and the share of China's construction machinery in the global market will continue to increase in the future. At the same time, with the end of the industry bottoming, the sales of construction machinery industry will pick up. Domestic demand still exists, and it is uncertain whether export will become the main support in the future. I believe that with the gradual going out of China's equipment and the continuous expansion of the international trade market, the pattern of the two major domestic and international markets will be gradually established.

Lv Ying said that it is unlikely that there will be any new drastic changes in the sales volume in the fourth quarter. Although the sales volume of some products may recover, the quantity and scale will not be too large. In terms of exports, international trading enterprises should be alert to the adverse impact of the recent sharp increase in interest rates of the United States dollar on some countries, which will be transmitted to the demand for construction machinery. They should comprehensively study and judge the new changes after the recovery of the domestic market, and reasonably adjust production capacity.