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As domestic economic activities gradually get on track, the demand for excavators that was suppressed by the epidemic in the first two months ushered in an outbreak.
According to data released by the China Construction Machinery Industry Association, the cumulative sales of domestic excavators from January to February totaled 19,200 units, a year-on-year decrease of 37%. Among them, the domestic sales volume was 14,700 units, down 46.5% year-on-year. Sales rebounded sharply in March. April excavator sales from 25 major manufacturers increased 60% year-on-year to 45,426 units. Domestic sales increased by 65% year-on-year to 43371 units.
After entering April, multiple brands of excavators, loaders, cranes, concrete pump trucks, accessories and maintenance fees have all increased to varying degrees: on April 10, the price of XCMG small excavators increased by 10%, medium and large The price of excavators increased by 5%; on April 11, Sany Heavy Industry increased the price of its small excavators by 10% and medium and large excavators by 5%; on April 20, the price of all excavators of Sunward Intelligent Company increased by 5% -10%.
Regarding the current “increasing volume and price” in the excavator market, on May 14, Li Huan, a machinery industry analyst at a brokerage firm in Beijing, analyzed to reporters: “The apparent year-on-year increase in the apparent growth rate was actually affected by the wrong time. The traditional peak season for excavator sales is generally March-April, but due to the impact of the epidemic, actual sales were basically not formed in February or even early March, which led to a wrong period of sales. The peak sales period may only slowly start from late March. Appeared, the original backlog of demand was also released in April and May, and then the current situation of both volume and price rises."
New infrastructure stimulates domestic demand
The so-called new infrastructure actually refers to investing in the infrastructure of emerging industries. Li Huan drew an analogy to reporters: "If you build a house as an IDC data center, it is called a new infrastructure. On the contrary, if it is used for a factory in a traditional manufacturing industry, it is considered an old infrastructure, but it is actually infrastructure construction. ."
On April 20, the first quarter of 2020 fiscal meeting clearly pointed out that in the near future, it plans to issue another 1 trillion yuan of local government special bond quota in advance to help proactive fiscal policies and further stimulate infrastructure investment.
In Li Huan's view, the macro-level country hopes to increase resource investment to promote the economy's intention is obvious. "This includes special bonds and other control tools. Infrastructure construction is definitely the main point of force, which will drive the entire construction demand, and will also play a significant role in the workload. In this case, superimposed on the short-term rush after the resumption of work and production. Demand has jointly promoted this blowout market."
On April 30, in the Sany Lingang Industrial Park, nearly a thousand "Sany" medium-sized excavators of various specifications gathered in a row and were waiting for acceptance and delivery. On average, one was driven away every 5 minutes.
And this scene has been going on for nearly half a month. According to Yu Hongfu, director of Sany Group and chairman of Sany Heavy Machinery, the capacity of Sany Group's excavator market will increase by 5-10 points year-on-year in 2020. "At present, the Chinese excavator market is over-compensated and the entire market is in short supply. Especially for Sany's excavators, there is a large number of client shortages in the market, and we are also actively working to cope with it." Yu Hongfu added.
On the other hand, affected by the continuous spread of the global epidemic, the global industrial chain supply is tight, leading to a linear increase in the overall cost of excavators, which in turn triggered collective price increases by excavator manufacturers.
In this regard, Dongxing Securities' research report analyzed that the foreign-brand components that are currently mainly purchased by domestic construction machinery include hydraulic parts, chassis and engines. Affected by the spread of the epidemic overseas, European heavy-duty truck chassis manufacturers have successively suspended or reduced production. At the same time, the cost of upgrading from the third generation to the fourth generation of the chassis has increased significantly. However, driven by the price increase of some foreign-owned brand parts, this price increase will also help stabilize the profitability of OEMs and parts companies. Under the situation where the downstream demand shows resilience, after the short-term impact, domestic OEMs choose more core parts to localize, which will not only help reduce costs and control costs, but also help maintain the security and stability of the supply chain.
Yu Hongfu also agreed: "In the long run, we are the first to propose price adjustments. This is also to protect the interests of customers and the interests of the industry. If some manufacturers can’t hold on and withdraw from this market, it will also benefit our clients. A big loss."
Small excavators are favored
In fact, in the current wave of high growth, small excavators are favored by the market.
Yu Hongfu said that throughout March, the growth of Sany Group's excavators was close to 16%. Among them, the small excavator with the largest market share is 5-6 tons. Medium-sized excavators of 20-ton class and large-scale excavators of 40-ton class also have good growth.
Regarding this phenomenon, Li Huan believes: “At the beginning of this year, many migrant workers were unable to return to the cities where they used to work for various reasons, so they stayed there. In recent years, benefiting from the construction of new rural areas and the fight against poverty, the use of small excavators Demand is on the rise, such as leveling camps, digging ditches, etc. In this case, some migrant workers choose to buy small excavators locally to pick up jobs, as an alternative to rework."
The medium and large excavators began to usher in high growth in April. "The demand in the general real estate industry is concentrated on medium and large excavators. With the gradual progress of the resumption of work and production throughout the country, there has been a significant improvement since April." Li Huan explained.
So, how long will this wave of rising volume and price last?
Li Huan believes: "It shouldn't be a big problem to maintain sustained growth in May and June, because the base in May last year was also relatively low, and the growth in the second quarter of last year was relatively flat. However, the situation in the third quarter is currently not very predictable. In the traditional off-season, this round of peak season sales will more or less overdraw the demand in the later period."
However, driven by the inventory update and real estate and infrastructure investment demand, the future demand for excavators still has a solid support.
According to the calculation of Dongxing Securities, the sales of new excavators from 2020 to 2022 will be 251,100 units, 266,900 units, and 281,400 units, respectively, with year-on-year growth rates of 6.5%, 6.3% and 5.4%. Based on the analysis of the potential space for inventory replacement of the sample excavator age structure from 2008 to 2013, it can be calculated proportionally that 106,900 units are expected to have more than 12,000 operating hours, which also means that the demand for inventory renewal in 2020 will be at least It can support sales of more than 100,000 units. Assuming that the average number of operating hours of excavators per year is about 1500, the number of operating hours of excavators produced in 2008-2013 in the next five years will be 698,700, which will exceed 12,000 hours, which means that the potential replacement demand will be about 70 in 2021-2025. 10,000 units, with an average annual replacement demand of about 139,700 units.
