China Construction Machinery Market in April
In April 2022, China's construction machinery market index, namely CMI, was 107.67, a year-on-year decrease of 17.62% and a month on month decrease of 5.99% (according to the judgment standard of CMI, the CMI value in April was still lower than the boom and bust value of 130, approaching the contraction range, and vigilant against the accumulation of market downside risks).
In April, China's construction machinery market index decreased year-on-year and month on month, indicating that the domestic construction machinery market was affected by the COVID-19, resulting in the original annual seasonal periodicity further tending to be less obvious. The market situation in April was very different from that of the same period last year. It was not only due to the delay or even shutdown of downstream projects and related logistics industries caused by the COVID-19, but also had a great negative impact on the production and manufacturing links of host manufacturers and spare parts manufacturers in the middle and upper reaches. The passive lack of production capacity combined with the cooling of the terminal market made China's construction machinery market still cold in April this year.
As of April 24, the operating rate in Northwest China was about 49%, that in Northeast China was about 45%, that in East China was about 51%, and that in Southwest China was about 55%, 2, 4, 5 and 3 percentage points lower than that in the previous period (April 10); The operating rate in South China is about 56% and that in Central China is about 58%, which is the same as that in the previous period; The operating rate in North China was about 48%, 2 percentage points higher than that in the previous period. On the whole, the markets in South China, central China and North China have recovered slightly, but the markets in East China, Northwest China and southwest China are still mired in the spread of COVID-19 and insufficient construction.
In the CMI index, the inventory index fed back by the manufacturer group decreased by 0.9 percentage points and the production index decreased by 5.7 percentage points compared with the previous period; The new order index fed back from the investigation of the agent group decreased by 30.4 percentage points year-on-year, 41.8 percentage points month on month, and the user price index for the first-line market investigation decreased by 2.8 percentage points compared with the previous period.
According to the data released by the excavator branch of China Construction Machinery Industry Association recently, the 26 main engine manufacturing enterprises included in the statistics in March 2022 sold 37085 sets of various excavation machinery products in March 2022, a year-on-year decrease of 53.1%; Among them, 26556 units were sold in the domestic market, with a year-on-year decrease of 63.6%; 10529 sets were exported, with a year-on-year increase of 73.5%. Among them, the domestic market was lower than our expectation of 7018 sets, and the market continued to deteriorate in March, worse than expected.
From the perspective of market terminals, in the first three weeks of April 2022, the operating hours of market monitoring excavators in the domestic circulation field decreased by 27% year-on-year and 16.57% month on month.
From the perspective of increased investment on the demand side, except for infrastructure investment and mining investment closely related to the demand for construction machinery, the growth rate of other investments has improved little.
From January to March 2022, the investment in fixed assets (excluding farmers) was 10487.2 billion yuan, a year-on-year increase of 9.3%, and the growth rate was 2.9 percentage points lower than that of the previous month.
From January to March, infrastructure investment (excluding power, heat, gas and water production and supply) increased by 8.5% year-on-year, 0.4 percentage points higher than that of the previous month. Among them, the investment in water conservancy management industry increased by 10.0%, the investment in public facilities management industry increased by 8.1%, the investment in road transportation industry increased by 3.6%, the investment in railway transportation industry decreased by 2.9%, and the growth rate decreased by 12.5%, increased by 3.8%, decreased by 4.6% and increased by 5.1 percentage points respectively.
From January to March, the investment in mining industry increased by 19.0% year-on-year, of which the investment in coal increased by 50.8%, and the investment in ferrous metal, nonferrous metal and non-metallic mining and dressing industry increased by 89.8%, 18.2% and 27.3% respectively. These four items all achieved significant growth compared with the previous February.
From January to March, manufacturing investment increased by 15.6% year-on-year. Among them, the investment in equipment manufacturing industry increased by 27.3%, and the investment in raw material manufacturing industry increased by 15.0%, and the growth rate decreased by 6.7 and 3.5 percentage points respectively.
From January to March, the investment in real estate development was 2776.5 billion yuan, a year-on-year increase of 0.7%, and the growth rate was 3 percentage points lower than that of the previous month. The funds in place of real estate development enterprises decreased by 19.6% year-on-year, with a decrease of 2.1 percentage points; The construction area of real estate development enterprises increased by 1.0%, and the new construction area of houses decreased by 17.5%, worsening by 0.8 and 5.3 percentage points respectively.
In terms of regions, the investment in the eastern region increased by 9.5% year-on-year, the investment in the central region increased by 14.4%, the investment in the western region increased by 11.3%, and the investment in the northeast region decreased by 1.4%.
From January to March, the top 10 regions with year-on-year growth rate of investment were Inner Mongolia Autonomous Region, Xinjiang Uygur Autonomous Region, Hubei Province, Hainan Province, Jiangxi Province, Henan Province, Ningxia Hui Autonomous Region, Zhejiang Province, Shanxi Province and Fujian Province. However, compared with January February, the growth rate expanded only in Xinjiang, Ningxia, Gansu and Chongqing, and other growth rates retreated or remained unchanged.
From the perspective of funds, by the end of March 2022, all provinces have basically organized the issuance of special bonds issued in advance, with a cumulative issuance of about 1.25 trillion yuan, accounting for 86% of the amount issued in advance; Financial departments at all levels have allocated 852.8 billion yuan of bond funds to project units, accounting for 68% of the newly issued special bonds. The issuance scale in the first quarter is almost four times that of the same period last year, but the real implementation is expected to take place in the second quarter, and the issuance scale of new special bonds in the second quarter will exceed 2 trillion yuan, which is expected to become the issuance peak of the year.
At present, 80% of the new special bonds have been invested in stock projects, while more than 40% have been invested in "new infrastructure construction, new urbanization construction, transportation, water conservancy and other major projects". Driven by the steady growth policy to hedge the impact of the COVID-19, with the gradual implementation of special bonds and other supporting funds, transport infrastructure projects are expected to start in the middle and late May of this year, and June and the third quarter will usher in a period of concentration for the commencement and acceleration of various key projects this year.
In theory, China's domestic investment in infrastructure construction will exceed 5.5 trillion yuan in 2022, despite the implementation of favorable policies such as centralized and early issuance of special bonds and moderately advanced infrastructure construction.
However, from two aspects, one is that in the long run, the provinces with relatively concentrated demand for construction machinery and equipment are often economically developed areas with relatively perfect infrastructure and urbanization, and the space for further urbanization rate is low. On the contrary, there is more space for infrastructure and urbanization in the underdeveloped areas in the West and central China, but the market grass-roots ecology in these areas is not as mature and rich as the main demand market, The more mature the economic development is, the more demand will be brought by labor substitution. Second, in the medium and short term, the imbalance between supply and demand at the bottom of the market is the core reason behind the sharp decline of the short-term market. If the short-term stock is not digested, or the demand side of the terminal market is better improved to stimulate the recovery and transformation of the market demand of the terminal, the effect of the macro action will gradually decrease in the process of transmitting to the micro market branch.
From the end of 2008 to 2009, the state issued the "four trillion plan" to hedge against the adverse effects of the global financial crisis. No matter how this affected the macroeconomic level, it directly led to a round of rapid progress in China's construction machinery market from 2010 to 2011, and indirectly led to the large-scale outbreak of upstream and downstream cumulative risks of the industry after the superposition of the downward cycle from 2012 to 2015.
At this time point in April 2022, we saw a sign similar to that of that year. Based on the experience of the last round of industry cycle, the author appealed to the majority of colleagues that some more rational measures should be taken to deal with the possible medium and short-term huge fluctuations in the market.
By incorporating the excavator sales data and other related index data in March 2022 into the monitoring and prediction data model of China's construction machinery market, we predict that the domestic excavator market sales in April 2022 will be 14971 units, a year-on-year decrease of 63.57%. The forecast data will be updated monthly according to the upstream and downstream economic, investment and sales data and the real-time feedback of the first-line market.
