"In May, the sales volume in the domestic market almost halved." A person in charge of a head construction machinery enterprise recently told Xinhua Finance and economics that due to the impact of epidemic factors on the supply chain, the rise in raw material prices, the industry is still in a downward cycle and other factors, the production and sales of the construction machinery industry represented by excavators have declined significantly.
Although with the improvement of the epidemic prevention and control situation, the increasing local investment and the gradual recovery of the confidence of industry practitioners, the construction machinery industry will still be under pressure in the short term due to the long investment transmission cycle. In the long run, it is still a "must answer" for enterprises to actively explore the international market and confront the cyclical factors of the industry through internationalization.
"Capacity once dropped to 10%"
The heavy equipment industrial zone in the new port area of Shanghai Free Trade Zone gathers many construction machinery enterprises such as Sany Heavy Machinery and caterpillar, which is a window to observe the trend of the industry.
Affected by the new round of COVID-19 epidemic since early March this year, the production and operation of many enterprises have been suspended to varying degrees, and the supply chain terminals and production capacity of some enterprises have dropped significantly. With the full restoration of normal production and living order in Shanghai on June 1, many enterprises, including engineering machinery enterprises, gradually resumed their supply and production.
The bright yellow manipulator is waved up and down, flexibly welding the parts of the excavator. In mid June, the reporter saw in the production workshop of Shanghai Sany Heavy Machinery Co., Ltd. that about 300 robots were working, and the scene was busy.
"Before the epidemic, the factory produced about 3000 medium-sized excavators per month. In March and April, the production capacity was only about 10%-20% of the previous average." Said Zhangbiao, deputy general manager of Shanghai Sany Heavy Machinery Co., Ltd.
The average selling price of Sany medium-sized excavators is about 600000 yuan. Based on the monthly output of 3000 excavators, the monthly output value is about 1.8 billion yuan. It is conservatively estimated that the current outbreak in Shanghai has damaged the output value of Sany Heavy Machinery Shanghai factory by at least 2.5 billion yuan.
In response to the impact of the epidemic on the construction machinery industry, Zhang Biao said, "on the one hand, the transportation of some parts is not smooth, resulting in a shortage of parts in the factory; on the other hand, the products produced cannot be transported out, forcing enterprises to reduce production."
In May, the domestic sales volume was close to halving, and the industry as a whole declined
Although the production capacity has been restored, taking Shanghai Sany Heavy Machinery Plant as an example, the plant has not been operating at full capacity since June. "With the improvement of intelligent manufacturing, we can further improve efficiency and get back the time delayed by the epidemic." Zhang Biao said frankly, however, due to insufficient market demand, the factory currently maintains a monthly output of about 2000 sets.
The overall demand of the industry is insufficient, which is an important reason for the decline in sales of excavators and loaders. According to the statistics of 26 excavator manufacturers by China Construction Machinery Industry Association, in May this year, 26 enterprises sold 20624 excavators of various types, a year-on-year decrease of 24.2%; Including 12179 sets in China, down 44.8% year-on-year. Sales in the domestic market have nearly halved. From the perspective of 22 loader manufacturers, 11059 loaders of various types were sold in May, a year-on-year decrease of 27%.
From January to may 2022, 122333 excavators were sold, a year-on-year decrease of 39.1%; Among them, there were 80097 sets in China, a year-on-year decrease of 54.7%.
The decline of the industry has also led to the shrinking of profits of some related enterprises. Statistics show that in the first quarter of this year, the revenue of the machinery industry fell slightly year-on-year, and the net profit attributable to the parent company fell significantly under the high base of last year. Take Hengli hydraulic as an example. In the first quarter of this year, the revenue and net profit of the enterprise decreased by 22.97% and 32.56% respectively.
An important factor in the overall downward trend of the market is that the industry has not yet stepped out of this cycle. The construction machinery industry has entered a downward cycle since 2021. From historical experience, the duration of each cycle is about three to five years, which makes the market less optimistic about the near-term prospects of the industry.
Xiangwenbo, chairman of Sany Heavy Industry, said, "the construction machinery industry has experienced five years of high-speed growth from 2016 to 2021. We expect moderate decline or even negative growth. This is the industry characteristic."
The main application scenarios of the products in the construction machinery industry are infrastructure construction, real estate construction and mining operations. Among them, infrastructure construction is the top priority, digesting most of the industry products. At the beginning of this year, the central and local governments announced many investment plans in the field of infrastructure construction. However, the industry generally believes that the project implementation needs a certain period, which is also the reason why the industry is under great pressure in the first half of this year. "From the project announcement, to the availability of funds, to the procurement of building materials and the leasing of machinery and equipment, this cycle will not be short." A construction machinery equipment leaseholder told reporters.
The rising cost of steel and other materials also puts great pressure on the construction machinery industry. Zoomlion said that the prices of bulk raw materials and transportation costs have increased significantly, putting great pressure on the gross profit margin and net profit margin of the industry. However, after rising for four consecutive months, steel prices fell in May, which is good news for the industry.
The China Iron and Steel Industry Association reported on June 17 that in May, China's economy showed a good momentum of recovery. Although the domestic market steel demand started, it was still less than expected; Affected by the drop in raw material prices, steel prices have also declined. With the implementation of policies and measures to stabilize growth, the situation of epidemic prevention and control continues to improve, the demand for steel in downstream industries will be further released in the later stage, the supply and demand of steel market is expected to remain stable, and the steel price will fluctuate slightly.
Opening up the international market has become a "must answer"
While the domestic market is facing great downward pressure, some enterprises in the construction machinery industry performed well in the international market in the first half of the year. According to the data of China Construction Machinery Industry Association, in May, 26 major excavator enterprises exported 8445 sets, a year-on-year increase of 63.9%. From January to may, 26 enterprises exported 42236 sets, a year-on-year increase of 75.7%.
At the end of April, Shanghai Sany Heavy Machinery Co., Ltd. entered the "white list" for resumption of work and production in Shanghai at that time, and then the production capacity gradually recovered. According to the data, in May, the production of excavators in the factory reached 3300, exceeding the pre epidemic level, of which about 50% was for export.
It is generally believed in the industry that, compared with the volume of the domestic market, the volume of the international market is an order of magnitude different from that of the domestic market, which is difficult to play a specific supporting role in the performance of enterprises in the industry. Developing the international market is a "must answer", but it takes a long time.
As the investment plans of various regions have been implemented and transmitted to the construction machinery industry, the market is optimistic and expects that the industry will walk out of the "low before high" situation throughout the year. At the performance presentation meeting in mid May, XCMG machinery said that the domestic epidemic fluctuations had a certain impact on the first half of the year, but the company expected that infrastructure investment and major projects would only be delayed, not reduced, or even increased.
According to the Research Report of Pacific Securities, under the main line of steady growth, a large number of infrastructure projects will be implemented, the real estate is expected to stabilize and rebound, and the demand of the construction machinery industry will be gradually released.
According to the Research Report of Dongguan securities, the video conference on national financial support to stabilize the economy proposed to implement 33 measures to stabilize the economy, requiring all provincial ministries of finance to adjust the issuance plan of special bonds and ensure that the issuance of new special bonds is basically completed by the end of June and the use of new special bonds is basically completed by the end of August. This will help the prosperity of the infrastructure industry rebound and is expected to boost the demand for construction machinery.
