China construction machinery gold mining international market

On Nov 7, the China Construction Machinery Association released a sales bulletin for major products in the construction machinery industry in October 2022. According to the association's statistics on 26 excavator manufacturers, 20,501 excavators of various types were sold in October, up 8.1 percent year on year.

Driven by the policy of stabilizing growth, the recovery of domestic infrastructure construction and the growth of international market demand, the sales volume of Chinese construction machinery returned to positive growth in the third quarter. Lyu Ying, deputy secretary-general of China Construction Machinery Industry Association, said in an interview with our reporter 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 been further strengthened. Looking ahead to the fourth quarter, the construction machinery industry is expected to continue to pick up, but whether the inflection point has been formed, it remains to be seen.

A gradual recovery in the market

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

In October, China Construction Machinery Association to 26 excavator manufacturing enterprises statistics, sales of all kinds of excavators 20,501 sets, an increase of 8.1%, including domestic 11,350 sets, down 9.91%; Exports were 9,151 units, up 43.8 percent year-on-year. According to the statistics of 22 loader manufacturing enterprises, 9,448 kinds of loaders were sold in October 2022, with a year-on-year growth of 1.85%. Among them, 6,304 units were sold in the domestic market, down 5.98% year on year; The export sales volume was 3,144 units, up 22.3 percent year-on-year.

"The recovery of construction machinery to positive growth is driven by multiple factors, among which the national policy of stabilizing growth has played a big role." "Since the beginning of this year, the government has introduced several policies to stabilize growth, which has played a key supporting role in promoting the development of the entire industry," Lv said.

From the supply side, the upstream of the construction machinery industry mainly includes steel, hydraulic parts, engines and other raw materials and core parts. The price fluctuation of steel and other raw materials directly affects the production cost of construction machinery. In the first half of the year, steel prices as a whole show the development trend of "high and falling", which helps 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 the downstream infrastructure construction, real estate construction, coal mining and so on. In the first half of this year, many projects were delayed due to the multiple COVID-19 outbreaks and high temperature power rationing in many places.

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

"As we enter the second half of the year, a lot of companies are rushing to make sure they meet the construction schedule for the whole year." Yuan Xuezheng, a researcher with the Machine Industry Think Tank, said that although the external environment for construction machinery this year is not as good as last year, there are still some positive factors. For example, expanding investment in the mechanical and electrical industry, increasing demand from overseas markets, and the need for replacement brought about by environmental protection and technology have boosted sales of construction machinery.

Export sales exceed domestic sales

On Oct 25, Sany Heavy Industry announced that its international sales revenue from January to September was 25.88 billion yuan, up 43.7 percent year on year and 10.8 percentage points faster than in the first half of the year. Among them, the sales revenue in Asia and Australia reached 11.595 billion yuan, an increase of 52.3%; The sales revenue in Europe was 7.517 billion yuan, an increase of 26.5%; The sales revenue of the Americas region was 4.846 billion yuan, an increase of 63.5%; Sales revenue in the African region increased by 29% to 1.92 billion yuan.

The person in charge of SANY Heavy industry told reporters that Sany mining machinery's global market share has increased rapidly, overseas market share has broken 8%; In the United States, the United Kingdom, Italy, Brazil, Canada and other overseas mining machinery markets, sales revenue has achieved a rapid growth of more than 60%.

Xugong Machinery, another leading company in construction machinery, also adheres to an international strategy. Xugong's products have a wide range of export sales in the world, with international revenue accounting for more than 50%.

"The international market share of domestic construction machinery enterprises has increased a lot compared to two years ago." Yuan also said that exports have largely smoothed the domestic cycle when domestic demand is not particularly booming.

Since the third quarter, construction machinery as a whole can return to positive growth, export growth does play an important role. In the first September of this year, the export sales of excavators were 80,000 units, up 70.5% year on year, among which the export sales of excavators exceeded the domestic sales for the first time in September, accounting for 50.35%.

"It is the first time in many years that exports have exceeded domestic sales." According to customs statistics, exports of construction machinery continued to exceed $4 billion in July, August and September this year, Ms. Lu said.

Previously, the international construction machinery market has a strong brand inertia, international brands in some areas of the market for many years, it is difficult for domestic enterprises to enter the main market. But that is changing. At present, many foreign construction machinery enterprises are faced with such problems as uncontrollable production cost, incomplete industrial chain, long supply cycle and difficult delivery. The product supply is greatly reduced, which gives Chinese construction machinery enterprises the opportunity to expand the international market.

According to Yuan, 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. Chinese construction machinery enterprises have advantages in electrification and digitalization, strong industrial resilience and cost-effective products, and have effectively seized the opportunity to enter the international market.

"The supporting role of the domestic industry chain to the international construction machinery industry chain is highlighted." 'The increase in exports is not only for complete machines, but also for parts,' Ms. Lu said.

Take Brazil as an example, in the past in our construction machinery export market ranked in ten, three quarters into the top ten. Nearly half of its imports of construction machinery are components. "Whole" and "zero" export, so that domestic construction machinery enterprises realize the leapfrog development in the non-traditional advantages of the market.

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

Expect steady growth

On November 4, Liugong's full series of Guosi products were unveiled at the groundbreaking ceremony of Liugong's Central China Industrial Base Project and the release of Liugong's comprehensive solutions. According to reports, at present, Liugong has 28 loaders, 31 excavators, more than 10 bulldozers, graders and other engineering machinery and equipment to complete the "National four" environmental record.

From December 1, the construction machinery industry will officially enter the "National IV" emission standard era. In the short term to the construction machinery industry sales impact geometry?

"While it is true that the previous two upgrades of emission standards brought about big fluctuations, this one is not necessarily so." "The whole market has changed its expectations of environmental emissions upgrading, and the impact of the new emission standards may not be significant," Lu said.

Referring to the trend of electrification and intelligentization of construction machinery, Lv Ying believes that our country has a great advantage in related fields. But in the longer term, there are technical and service difficulties to overcome. With the accumulation of enterprise technology in the future, electric construction machinery is expected to achieve accelerated development in the next 2 to 4 years.

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

"Conditions across the construction machinery industry are improving, but to what extent remains to be seen." Yuan Xuezheng believes that currently the domestic market and the international market are in different industrial cycles. The main role of export is to smooth the domestic cycle through the international market. In the future, the share of China's construction machinery in the global market will continue to increase. At the same time, with the end of the industry bottom, construction machinery industry sales will rise. The domestic demand still exists, and it is still unknown whether export will become the main support in the future. It is believed that with the gradual going out of China's equipment and the continuous expansion of overseas markets, the pattern of two big markets at home and abroad will be gradually established.

Lu Ying bluntly said that the fourth quarter is unlikely to see dramatic new changes in sales volume, although some product sales may show a recovery growth, but the scale of the number will not be too big. In terms of export, enterprises should be alert to the adverse impact of the recent sharp US dollar interest rate hike on some countries to the demand for construction machinery. They should make comprehensive study and judgment based on the new changes after the recovery of the domestic market, and reasonably adjust production capacity.