At the policy level, since 2020, under the joint promotion of national policy support, downstream infrastructure construction and other related fields, and the continuous increase in investment, my country's construction machinery industry has steadily and quickly resumed work and production, and the domestic market has continued to rebound; at the same time, Facilitation measures introduced in some overseas markets are good for the export of my country's construction machinery industry. But on the other hand, the impact of industrial standards on the construction machinery industry is becoming increasingly prominent, and the operating risks brought by policy pressures from environmental protection are also rising.
In terms of industry operation, the China Construction Machinery Market Index (CMI) index fell month-on-month in May, and demand has weakened compared with the previous month, but the market is still in the annual cyclical peak season. High-frequency data shows that the sales of excavators from January to May were outstanding, and the growth in May far exceeded expectations; the sales of small excavators continued to lead the market; the market share of leading enterprises was generally stable; the concentrated start of new infrastructure projects promoted a surge in demand. It is expected that the domestic excavator market will continue to pick up in the second quarter. The recently released list of the top 50 global construction machinery manufacturers in 2020 shows that Chinese brand influence and industrial status continue to improve.
In key overseas markets, in the United States, construction machinery shipments accelerated sharply in April, and inventories continued to grow year-on-year; at the same time, new and uncompleted orders for construction machinery continued to show double-digit negative growth. At present, the downward pressure on the US construction industry will continue to increase in 2020, and the construction machinery market is expected to recover weakly. In Japan, the year-on-year growth rate of total construction machinery shipments in April has accelerated from the previous month, with overseas shipments plummeting; affected by many negative internal and external factors, it is expected that the sales of the construction machinery industry in Japan, especially exports, will still face severe challenges in the short term .
Affected by the outbreak of the epidemic and overseas spread, my country's construction machinery industry encountered severe challenges in the first quarter of 2020. It is expected that the domestic market will continue to pick up in the second quarter, but the overseas market still faces a high degree of uncertainty. Recent risks are mainly reflected in: the epidemic and control measures have brought extensive and serious drag on the global economy, and the possibility of further deterioration cannot be ruled out in the short term; the trend of overseas epidemics is still highly uncertain, and the risk of external demand fluctuations in the construction machinery industry continues Highlighted; recent industry economic efficiency indicators show that business pressure still exists, and short-term prospects are expected to remain uncertain.
In terms of export risk prevention, it is recommended that products should focus on short-term export credit risks of excavators and loaders. In terms of overseas markets, it is recommended to focus on export credit risks to Mongolia, Chile, Mexico, Germany, Cambodia, Russia, and Indonesia in the near future; in addition, as key markets, the concentration risks in the Philippines, the United States, Vietnam, and India are also worthy of attention and close attention. track.
1. Overview of the construction machinery industry
1.1 Industry dynamic review
1.1.1 The investment stabilization policy is effective
Investment in new projects continues to show a positive trend
Since 2020, under the joint promotion of national policy support, downstream infrastructure construction and other related fields, and the continuous increase of investment, the construction machinery industry has steadily and quickly resumed work and production, and the market economy has continued to rebound. For example, in April, the Ministry of Commerce and other eight departments jointly issued the "Notice on Further Doing a Good Job in Supply Chain Innovation and Application Pilot Work" for accelerating and helping leading companies in the supply chain and enterprises with important influence in the global supply chain to resume work and production. Clear policy guidelines were given to facilitate the rapid recovery of damaged production capacity. Statistics show that from January to May, the planned total investment in newly-started projects in China increased by 7.9%, a growth rate of 6.8 percentage points higher than that of January to April. In terms of related indicators, the production and sales of construction machinery products were booming in May. The output of excavation, soil shovel and concrete machinery increased by 62.1% and 42.2% year-on-year; sales of excavators increased by 68% year-on-year, all of which indicate that future investment is expected to continue to rebound. Good posture.
The strong demand in key downstream areas such as transportation infrastructure is the main reason for the rapid rise in the domestic market. The substantial increase in investment in related fields is also the source of power to support the development of the construction machinery industry in the future. According to the "Government Work Report", it is planned to arrange local government special bonds of 3.75 trillion yuan this year, an increase of 1.6 trillion yuan over last year, and increase the proportion of special bonds that can be used as project capital. The central budget allocates 600 billion yuan to help The construction of new and old infrastructure. Among them, transportation infrastructure investment is an important tool for economic counter-cyclical adjustment, which is very important for the current “six stability” and “six guarantees”. Among them, intercity high-speed railway and urban rail transit will also become important aspects of investment in provinces and cities in 2020. In the future, the development of new infrastructure including 5G infrastructure, UHV, big data centers, inter-city high-speed railways and urban rail transit will also inject continuous development momentum into the construction machinery industry.
1.1.2 The non-road mobile machinery industry standards continue to upgrade to accelerate the elimination of high-emission equipment
Judging from the recent mainstream trends and typical events, the domestic construction machinery industry related environmental protection standards have become increasingly strict, which promotes the accelerated transformation and upgrading of the industry, while also posing more challenges to the core technology and operating capabilities of the enterprise. Domestically, the most representative one is the "Notice of the State Council on Printing and Distributing the Three-Year Action Plan for Winning the Blue Sky Defense War". Since 2018, cities across the country have begun to delimit emission control zones for non-road mobile machinery, and the delisting of high-emission equipment has accelerated. . According to Mysteel's incomplete statistics, as of April 2020, at least 106 cities and counties nationwide have designated areas for prohibition of high-emission non-road mobile machinery such as excavators.
Overseas, the EU Stage V emission regulations also clearly stipulate the deadline for NRMM (non-road mobile machinery) emissions in 2020 and 2021. Although due to the severe impact of the epidemic, the European Commission has recently formally proposed a proposal to extend the transition period of non-road mobile machinery from stage 4 to stage 5. The proposal calls for an extension of 12 months to alleviate non-road mobile machinery manufacturers caused by the outbreak. The difficulties faced are mainly due to a certain interruption in the supply of parts due to the outbreak of the epidemic. For example, the stringent epidemic prevention measures implemented in Europe and the United States have exacerbated the shortage of parts supply. However, the general trend of stricter standards has not changed. Even if it is postponed, the related economic losses and waste of raw materials and resources cannot be completely avoided. It can be seen that the impact of industrial standards on the construction machinery industry is increasingly prominent, whether it is domestic sales or export, and the operating risks brought by policy pressure from environmental protection are also rising.
1.1.3 Facilitation measures introduced in some overseas markets
Good for my country's construction machinery industry exports
While my country continues to promulgate support policies such as customs and taxation, relevant facilitation measures in some overseas markets also benefit my country's construction machinery industry to a certain extent. For example, the Iranian General Administration of Customs (IRICA) announced that it will allocate 60 trillion riyals (approximately US$1.41 billion) from March 20 to support enterprises to import necessary machinery and equipment and transform production lines through tariff reductions. . For another example, the United States also allows some importers affected by the epidemic to postpone the payment of tariffs. The US Department of the Treasury and Customs and Border Protection also jointly issued interim regulations on the evening of April 19 to allow imports facing "serious financial difficulties" during the new crown epidemic. The merchant postponed the payment of certain types of duties and taxes for 90 days. These facilitation measures will directly ease the operating and financial pressures of relevant importers to a certain extent, and provide effective support for stabilizing the stock and increment of orders.
1.2 Basic situation of industry operation
1.2.1 Excavator sales growth in May far exceeded expectations
From January to May, domestic sales and exports performed well
According to statistics from the China Construction Machinery Industry Association, domestic companies sold 31,700 excavators in May, a year-on-year increase of 68%, far exceeding previous industry expectations (50%). From January to May, the cumulative domestic and export sales of excavators increased by 19.4% and 20.7% year-on-year respectively. Among them, the domestic sales of excavators in May was 29,500 units, a year-on-year increase of 76.3%; export sales were 2223 units, a year-on-year increase of 3.3%; from January to May, the cumulative sales of excavators by domestic companies was 145,800 units, a year-on-year increase of 19.4%. Among them, domestic sales were 134,200 units, a year-on-year increase of 19.4%; export sales were 11,600 units, a year-on-year increase of 20.7%. There are three main reasons for the increase in sales of excavators in May. The first is the low base in the same period last year; the second is the explosive growth of the delayed equipment demand for downstream stock projects and the resumption of work. For example, Komatsu’s average operating hours in April and May exceeded 140 hours, a positive increase for two consecutive months, indicating that downstream operations have resumed, and the backlog of demand due to the impact of the epidemic is continuing to be released; third, downstream incremental projects have increased and market confidence has increased.
From the perspective of industry competition, the market share of leading companies has remained stable overall. According to research data from Huaan Securities, the market share of March 1st was 25% in May, a slight decline year-on-year. The cumulative market share from January to May was 25.5%, the same year-on-year; XCMG’s market share in May was 15%, and the cumulative market share from January to May was 15%. The market share was 16.5%, with a slight increase year-on-year. From the perspective of product classification, sales of small excavators continue to lead the market. In May, the domestic sales of small excavators reached 17,800 units, a year-on-year growth rate of 83.7%; the sales of medium excavators and large excavators were 7,538 units and 4,161 units, respectively, with year-on-year growth rates of 70.2% and 60.8%. From January to May, the cumulative domestic sales of small digging machines was 84,100, a year-on-year increase of 23.7%; the cumulative sales of medium digging and large digging were 33,500 and 16,600, respectively, up 14.6% and 9.6% year-on-year. From the perspective of the industrial chain, the sales of excavators will also further drive the incremental demand for breakers. According to a research conducted by Great Wall Securities, in terms of hammer matching rate, my country's excavator hammer matching rate is about 20%-25%, compared with 35% in developed countries and 60% in Japan and South Korea. At the same time, as the market continues to rise, the demand for parts such as upstream hydraulic cylinders and hydraulic pump valves of excavators is also expected to usher in high growth.
Looking to the future, the domestic market environment will continue to be stable and improving, and the concentrated start of new infrastructure projects will drive a significant increase in demand. It is expected that domestic excavator sales will continue to pick up in the second quarter.
1.2.2 The CMI Index Decline in May
But the market is still in the annual cyclical peak season
In May 2020, China's construction machinery market index, CMI, was 135.07, a year-on-year increase of 0.68% and a month-on-month decrease of 2.85% (according to the CMI judgment standard, 130<CMI≤170, relatively optimistic, and stable market growth). In May, the CMI index decreased slightly from the previous month and increased slightly year-on-year, indicating that the domestic construction machinery market is still in the annual cyclical peak season, but compared with the previous month, the demand has weakened. As of May 22, the operating rates of South China, East China, Southwest China, Central China, and North China have all exceeded 73%; the operating rate of Northeast China has exceeded 66%; however, in late May, the operating rate of some regions has decreased. In the CMI index, the inventory index reported by the manufacturer group was basically the same as the previous issue, and the production index remained high, which was an increase of 0.6% from the previous period; the new order index reported by the agent group increased by 3.3% year-on-year, a slight month-on-month A decline of 2.7 percentage points, and a 4.4 percentage point increase in the user price index for first-line market research. On the whole, the out-of-stock situation of the first-line market terminals has eased, but a small number of models of some brands are still out of stock.
1.2.3 The list of the top 50 global construction machinery manufacturers in 2020 released
The status of Chinese manufacturers continues to improve
According to the 2020 Yellow Table Equipment top 50 list released by the International Construction magazine (International Construction) of the British KHL Group, the construction machinery information provider, the 2020 Yellow Table Equipment top 50 shows that as of March 31, 2019 In the fiscal year, equipment sales of the top 50 companies reached 202.7 billion US dollars, a record high, an increase of 10% over the previous year. Among them, Caterpillar, Komatsu, and Deere maintained the top three positions. This time, Chinese companies continued to perform well, with a total of 9 companies on the list. The changes in the ranking show that the status of Chinese manufacturers continues to improve. Among them, Xugong Group and Sany Heavy Industry rose to the fourth and fifth places, and Zoomlion also entered the top ten.
2. Operation of key markets
2.1 United States
U.S. construction machinery shipments declined sharply in April, and inventories continued to increase year-on-year. According to data from the Census Bureau of the U.S. Department of Commerce, in April 2020, U.S. construction machinery shipments amounted to US$2.32 billion, a year-on-year decrease of 23.3%, a significant increase of 13.4 percentage points from the previous month; inventories amounted to US$6.02 billion, an increase of 3.6% year-on-year. The month-on-month decrease was 0.69%. In terms of time, April was at the peak of the outbreak in the United States, and a large number of construction projects and other related projects were forced to suspend or postpone their plans.
In April, new and uncompleted orders for construction machinery in the United States continued to show double-digit negative growth. Although most states in the U.S. are still deepening the restart, the risk of a rebound of the epidemic is still high, and protests and demonstrations have also hindered the resumption of work and production. Concerns about the second wave of new coronavirus infection cases are also rising. Many places in the United States have recently decided to slow down plans to restart economic activities in response to the increase in protests and demonstrations. Affected by this, the situation of new orders and uncompleted orders for construction machinery in the United States in April is not optimistic. Although the decline in April has slightly narrowed compared with the previous month, new orders and uncompleted orders for the industry in the month still fell by 17% year-on-year. And 16.9%, falling to 2.2 billion US dollars and 4.98 billion US dollars respectively.
The U.S. construction industry will face severe challenges in 2020, and the construction machinery market may be weak in recovery.
According to GlobalData research, due to the rapid decline in demand for new projects and the obstruction of production activities by safety regulations related to the new crown pneumonia epidemic, the output value of the US construction industry is expected to drop by 6.6% (equivalent to US$122.4 billion) in 2020. This latest forecast is far from the 0.6% ($12 billion) expected increase before the outbreak of the epidemic, and from the current situation in the United States, the construction industry is still facing greater risks of uncertainty due to the impact of the epidemic. The construction machinery industry market The prospects for recovery remain worrisome.
2.2 Japan
Overseas shipments fell sharply, and the year-on-year growth rate of Japan's total construction machinery shipments in April accelerated the decline compared with the previous month. According to data from the Japan Construction Machinery Industry Association, the total shipment of the construction machinery industry in April 2020 was 150.37 billion yen, a year-on-year decrease of 30.8%, and the decline accelerated by 13.2 percentage points from the previous month; of which, domestic shipments were 58.56 billion yen. , A slight increase of 0.4% year-on-year, a slight decrease of 0.3 percentage points from the previous month; but the decline in foreign shipments further accelerated by 12 percentage points to 42.2%, with shipments of 91.8 billion yen.
Affected by the internal and external environment, the Japanese construction machinery industry, especially exports, is facing severe challenges in the short term. First of all, from a structural point of view, the Japanese construction machinery industry accounted for 61.1% of foreign shipments in May. Recent high-frequency data shows that the drag effect of the decline in exports on the industry continues to appear. Second, the deterioration of the domestic macroeconomic environment has also intensified downward pressure on the industry. Japan’s implementation of blockade measures to curb the spread of the new crown pneumonia virus not only weakened economic activities but also caused the country’s economy to worsen its first recession in four and a half years. The survey results released by the Cabinet Office of Japan on June 8 showed that the judgment index of Japan’s current economic situation in May was 15.5, an increase of 7.6 points from the previous month (the index below 50 indicates a downturn in the economy); although the index has risen after a lapse of three months, But it is still at a historic low. According to the World Bank’s latest Global Economic Outlook report, Japan’s economy will shrink by 6.1% in 2020. Affected by the increase in consumption tax and the slowdown of the world economy, the Japanese economy has declined by 7.1% in the fourth quarter of last year at an annual rate; in the first quarter of this year, Japan's real GDP fell by 3.4% at an annual rate. Generally speaking, the Japanese economy is currently facing great difficulties. On the one hand, the aging problem is intensifying, the construction industry has insufficient young labor (the epidemic hinders relying on foreign introductions and aggravates the shortage), and the space for domestic demand is limited, and the support for large expenditures such as housing is insufficient. Therefore, the boom in the construction industry is constrained; on the other hand, the impact of the epidemic continues, the overseas market demand for construction machinery is still sluggish, and the stability of the industrial chain and supply chain is also threatened to some extent. The export of Japanese construction machinery and other export-oriented industries It may also face more challenges.
3. Industry risk outlook
Affected by the outbreak of the epidemic and overseas spread, the construction machinery industry encountered severe challenges in the first quarter of 2020. It is expected that while the domestic market will continue to pick up in the second quarter, overseas markets will still face a high degree of uncertainty. From the perspective of recent trends, the risks faced by the industry mainly involve three aspects. The first is the macro level, that is, the macroeconomic trend and the direct impact on the industry; the second is the meso level, that is, the entire industry chain including the terminal market faces. Various risks; the third is the micro level, that is, the various challenges faced by the enterprise in the production, operation and financing links. The main content of this issue is as follows:
3.1 The macroeconomic environment faces the risk of further deterioration
The epidemic and control measures have brought extensive and serious drag on the global economy, and the possibility of further deterioration cannot be ruled out in the short term. According to the World Bank’s latest "World Economic Outlook" report released in June, global GDP will fall by 5.2% in 2020 (a decrease of 7.7 percentage points from the 2.5% increase in January), which is the largest decline after World War II, and the decline in per capita GDP will spread. The national scope is the widest since 1870. Among them, the U.S. economy will decline by 6.1% this year (the January forecast is a growth of 1.8%), and the Eurozone will decline by 9.1% (the January forecast is a growth of 1%); affected by the epidemic and oil price fluctuations, the Russian economy may decline 6%. According to forecasts, world GDP will grow by 4.2% in 2021, of which developed countries will grow by 3.9%, and emerging markets and developing countries will grow by 4.6%. Considering that there are still some low risks, including the delay of the epidemic, the emergence of financial problems and the deterioration of the global trade situation, this forecast is accompanied by greater uncertainty.
my country's construction machinery industry has benefited from the significant improvement in the domestic industrial environment and the substantial increase in downstream investment, and the domestic sales boom has rebounded rapidly. In the past two months, the demand for key products such as excavators has shown explosive growth; but at the same time, overseas market risks are still constant Accumulation, downward pressure on the industry continues to increase. Among them, the economies of key markets such as Asia, Africa and Europe have not stabilized, especially countries that are highly dependent on resource export income and have a fragile financial system. Compared with the past, under the superimposed negative impact of the epidemic, the credit risk of these overseas markets may continue rising. Among them, from a structural point of view, the increasing downward pressure on the macro economy of emerging markets has a more prominent impact on my country's construction machinery industry exports.
3.2 There is still a high degree of uncertainty in the trend of overseas epidemics,
The risk of external demand fluctuations continues to highlight
The epidemic has not only brought unprecedented, rapid and serious economic forecast downward adjustments to the world, but also caused a significant deterioration in the financial conditions of many countries, a sharp increase in financial market fluctuations, and a huge negative impact on the construction machinery manufacturing industry and downstream construction industries. The downward pressure of the macro economy will not only affect the stability of trade, but will also continue to undermine investor confidence in the short term, weaken the government's ability to invest in infrastructure, and cause the delay or cancellation of some projects, which will also bring negative effects to the construction machinery manufacturing, leasing industry and other related fields The impact, to varying degrees, has caused delays in market demand and hindered or even interrupted supply in the industrial chain.
In terms of the trading environment, according to a study by the World Bank, in 2020, affected by domestic demand and supply, trade and financial fluctuations, the economic activity of developed countries may drop by 7%, and the recession may be the worst since World War II; emerging market countries and developing countries The country's GDP fell by 2.5%, and the decline will be at least the worst in 60 years. In terms of exports, although the year-on-year growth rate of export delivery value of my country's construction machinery industry rebounded sharply to 6.7% in March, it was still lower than the same period last year (10.5%); the growth rate in April fell back to 5.5% month-on-month, much lower than the previous year. The same period of the year (17.5%). Considering the current epidemic situation and resumption of work in key overseas markets, there is still greater downward pressure and credit risk in industry exports.
According to our research results, the risk of fluctuations in overseas market demand in the construction machinery industry from January to May is prominent, and the risks of some products and some key overseas markets continue to be highlighted. The product aspect is mainly reflected in the export credit risk of excavators and loaders is significantly higher than the overall level, and the key overseas markets are reflected in the higher risks in emerging markets such as Mongolia, Chile, Mexico, Cambodia, Russia, and Indonesia, as the developed markets The risks in Germany are also more prominent. On the whole, the main reasons come from two aspects. One is due to increased spending and slower economic growth, and the deterioration of the government's fiscal situation in overseas markets, which will limit the ability to invest in infrastructure projects; the second is due to rising unemployment. And income is restricted, and the growth of people's demand for housing will also slow down to varying degrees.
3.3 The economic benefits show that the business pressure still exists,
The short-term prospects remain uncertain
Although the boom of the domestic construction machinery industry has shown a rapid recovery trend recently, driven by the rising demand on the demand side and the price increase of some products, the sales profit margin of industrial enterprises in March and April has rebounded substantially; on the other hand, high-frequency indicators show 1 -In April, the cumulative year-on-year growth rate of the industry’s main business revenue and total profit was much lower than the rebound in sales profit margins. It can be seen that there are factors in the short-term adjustment of market supply and demand to prices for the improvement of profitability. Based on the overall situation at home and abroad, the foundation for recovery is still not solid, and the performance of the industry in the second half of the year will depend on the effects of domestic policies and the recovery process of overseas markets. Reach the expected level.
Although the recent trends in international commodity prices have brought benefits to the production costs of construction machinery, the supply of core components has also been tight due to the epidemic, which has led to an increase in costs. Therefore, the current operating cost pressure faced by the industry is still prominent on the whole. At the same time, given that there is still a possibility that overseas market demand will continue to shrink, and due to the impact of trade policies and control measures during the epidemic, the normal performance of overseas buyers will also be affected. Export companies will also face their ability to collect payments and resist exchange risks. In the continuous test, industry exports should also be alert to related risks in international geopolitical conflicts, continued trade disputes, and industrial policy adjustments. In addition, in the long run, there is still much room for expansion in overseas markets. Institutional research shows that the global construction machinery market space is about 200 billion US dollars, Caterpillar has more than 10% of the share, and the share of domestic manufacturers is still very limited. Take the excavator as an example, SANY’s overseas market share is 2%; in 2019, SANY excavator sales accounted for only 13% of exports; Japanese construction machinery’s foreign shipments accounted for more than 60% of the overseas market. The development space is still huge.
