In July 2020, sales of excavators were 19,110 units, a year-on-year increase of 54.8%. Among them, the domestic sales in July were 16,253 units, a year-on-year increase of 59.5%; the exports in July were 2,857 units, a year-on-year increase of 32.5%. The data continues to improve, indicating that the industry's prosperity continues to rise. The 34 trillion investment cake is blessed, and the trillions of construction machinery are "hard to find".
The issuance of special bonds is expected to increase before October to support infrastructure investment and ensure the growth of construction machinery orders; we continue to be optimistic about the construction machinery sector. The relevant beneficiaries are Sany Heavy Industry, Zoomlion Heavy Industry, and Xugong Machinery; taking tractors as an example, this year In the first half of the year, the sales of large and medium-sized tractors from enterprises above designated size increased by 17.79% compared to the same period last year. Some dealers even sold out prototypes.
This is a microcosm of China's construction machinery industry. According to statistics from China Construction Machinery Industry Association, from January to April 2020, the 25 excavator manufacturers included in the statistics sold 114,056 excavators, a year-on-year increase of 10.5%; of which 104,648 were domestic, accounting for 92% of the overall market sales; exports 9,408 units, accounting for 8% of the overall market sales.
In the fourth quarter of 2016, the sales of excavators as a barometer of construction machinery repeatedly exceeded expectations due to the demand for real estate, infrastructure and exports from the “Belt and Road” initiative. In 2017, the sales volume of excavators reached 140 thousand units, a year-on-year increase of 91.2%.
The last round of high growth in the construction machinery industry can be traced back to the “four trillion” investment in 2008. The production and sales of construction machinery products represented by excavators have increased significantly, and the annual sales of domestic excavators once climbed to 194,000 units in 2011. In 2012, industry demand fell sharply, and then entered a five-year continuous period of in-depth adjustment. In 2015, the annual sales of excavators fell to 61,000 units, only about 30% of the peak period.
In fact, this round of domestic investment is also very strong. Statistics found that as of March 1, 13 provinces and municipalities including Beijing, Hebei, Shanxi, Shanghai, etc. had issued a list of investment plans for key projects in 2020. This investment list includes a total of 10,326 projects, of which 8 provinces announced a total planned investment of 33.83 trillion yuan, and infrastructure projects are all key projects in various regions.
It is conceivable that a big cake of nearly 34 trillion yuan is difficult for the construction machinery industry to not become popular. But many industries in China will encounter the same problem, overheating is followed by overcooling.
People in the construction machinery industry should remember the heat before the last round of winter. After suffering from the 2008 financial crisis, the real estate industry in various regions developed rapidly. "Opening an excavator will definitely make money." So if you don't agree, you will buy an excavator. If you don't want to open it, you will rent it. The production capacity of the construction machinery industry is rapidly expanding. But soon the real estate entered a period of regulation, construction projects were drastically reduced, a large number of construction machinery vehicles were idle, and the market quickly entered a cold winter.
According to data, in 2017, the global construction machinery market was about 88 billion U.S. dollars (the statistical data mainly covers earth-moving machinery and road machinery), and the sales revenue of construction machinery in the Chinese market was 18.315 billion U.S. dollars, ranking second in the world after the United States. In 2018, the sales of major categories of construction machinery in China increased by more than 30%, and sales revenue is expected to reach 29 billion U.S. dollars, surpassing the United States and once again becoming the world's number one.
The cold sweat is, will such a blowout development enter a new round of winter ahead of schedule?
What's even more worrying is that even if major companies carry out capacity adjustments in advance, they cannot bear the influx of capital-if you do not increase capacity, it means that your cake is taken away by others, so you can only follow suit and form a vicious circle .
The life cycle of the machine is also something that needs attention. According to industry experience, the service life of an excavator is about 8 years. From the end of 2016 to 2019, the excavator will enter the peak period of stock equipment replacement. However, truck cranes, concrete machinery, tower cranes, etc., as post-cycle products of construction machinery, lag behind excavators in recovery, and their lifespan is about 10 years. It is expected that the peak period of their renewal will continue in the next few years.
In other words, once the peak period of mechanical upgrading is over, it will be 8 to 10 years, and it will be difficult for an incremental market to appear in the same area.
Is the overseas market a panacea to solve the cold winter caused by overcapacity? It used to be, but the future is really hard to say. From a strategic point of view, when the domestic market encounters a ceiling, focusing on overseas markets is one of the main ways to solve destocking. Previously, the main overseas battlefields of the Chinese construction machinery industry were South Asia, Southeast Asia, Africa, and Latin America. The high-end products were also mainly profitable in the North American market.
However, as international trade has entered a complex and changeable period, the uncertainty in trade between India and the United States has led to relatively large variables for Chinese construction machinery in these major markets.
The data is the best proof. According to data released by the customs, from January to June 2020, China's construction machinery import and export trade volume was 11.575 billion U.S. dollars (about 80.35 billion yuan), a year-on-year decrease of 18.6%. Among them, the export value was 9.73 billion U.S. dollars (about 67.54 billion yuan), a year-on-year decrease of 18.7%; the import value was 1.845 billion yuan (about 12.81 billion yuan), a year-on-year decrease of 18%.
From the perspective of the distribution and changes in the main regional markets for import and export, ASEAN is the main regional market for China's construction machinery, with exports accounting for 18.3%. The proportions of Africa, Latin America and the European Union have increased significantly, 15.52% and 15.12%, respectively, and the rest have declined to varying degrees. . Among them, the European Union has the smallest decline, which is 6.51%; Japan has the largest decline, which is 30.08%.
Please note that in the first half of this year, construction machinery exports to the United States were 1.107 billion US dollars, down 18.5% year-on-year, accounting for 11.38% of China's total exports in the first half of this year.
