The market has bottomed out? Excavator sales have seen positive year-on-year growth for three consecutive months
Recently, the China Construction Machinery Industry Association released data. According to statistics from major excavator manufacturers, 16,603 excavators of various types were sold in June 2024, a year-on-year increase of 5.31%, of which 7,661 were domestic units, a year-on-year increase of 25.6%; 8,942 were exported. A year-on-year decrease of 7.51%.
In this regard, Xugong Machinery (SZ000425, stock price 6.56 yuan, market value 77.5 billion yuan) related people analyzed to the "Daily Economic News" reporter via WeChat on July 8: "Although there are some positive signs in the industry, it is judged that construction machinery The turning point cannot simply be based on a time period or a type of product. Regarding this domestic industry cycle, we are optimistic that it will stabilize at the end of 2024 or early 2025. 2025 may be the turning point, and 2026 is the turning point.”
A total of 16,603 excavators were sold in June, a year-on-year increase of 5.31%.
Excavator sales in June better than expected
The construction machinery industry is a highly cyclical industry. The cycle is mainly affected by changes in demand for downstream real estate, infrastructure, exports, etc., as well as its own equipment update cycle, environmental protection emission policies and other factors. The average cycle of the construction machinery industry is roughly 8 to 10 years. The latest upward cycle began in 2016 and ended in the first half of 2021, followed by a downward cycle that lasted for three years.
The Centaline Securities Research Report believes that from a cyclical perspective, the construction machinery products that entered the market in 2016 will gradually enter the equipment update cycle from 2024, and the construction machinery industry is expected to bottom out. On the other hand, the export competitiveness of major engineering machinery products has continued to improve in recent years, and the proportion of exports has continued to increase. It is expected to continue to expand overseas markets in the future.
According to the China Construction Machinery Industry Association, from April to June this year, major excavator manufacturers sold 18,822 units, 17,824 units, and 16,603 units of various excavators respectively, with year-on-year increases of 0.27%, 6.04%, and 5.31%. It has achieved 3 consecutive years. The monthly growth rate is positive.
Especially in June, CME (Construction Machinery Magazine) predicts excavator sales of about 16,000 units, a year-on-year increase of 1.5%, of which domestic sales are expected to be 7,300 units, a year-on-year increase of 20%; export sales are expected to be 8,700 units, a year-on-year decrease of 10%. The actual data is that domestic sales were 7,661 units, a year-on-year increase of 25.6%; exports were 8,942 units, a year-on-year decrease of 7.51%, both better than expected.
In this regard, Hengli Hydraulic (SH601100, stock price 42.14 yuan, market value 56.5 billion yuan) related people analyzed to the "Daily Economic News" reporter through WeChat that the domestic demand for excavators in the second quarter was much better than that in the first quarter, mainly due to Driven by newly opened water conservancy projects, good mining demand and special government bonds, and the demand base after the second quarter of 2023 is very low, it is more likely to achieve year-on-year growth this year.
Construction machinery operating rate gradually improves
Judging from real estate-related data, although the cumulative year-on-year fixed asset investment in the infrastructure and mining industries declined slightly month-on-month in May, they remained relatively stable at 6.68% and 17.70% respectively. In May, the operating hours of China's Komatsu excavators were 101.10 hours, a year-on-year increase of 1.00% and a month-on-month increase of 4.66%. The operating rate in 2024 is on an upward trend.
According to the CCTV Financial Excavator Index, the national construction machinery operating rate in May was 56.94%; among equipment categories, the operating rate of hoisting equipment and excavation equipment was still significantly ahead of other equipment in May, with the operating rate of excavating equipment being 69.37%.
Dongguan Securities Research Report believes that the year-on-year decline in data such as the cumulative amount of investment in real estate development and the cumulative sales area of real estate commercial buildings continues to narrow. In the future, the central and local governments will further relax controls on real estate, which will lower the threshold for residents to purchase houses, reduce the pressure on residents to purchase houses, help the real estate market repair and destock, and the demand for construction machinery is expected to see a marginal improvement.
In this regard, XCMG Machinery related personnel said that at present, China's construction machinery market and construction engineering market have undergone tremendous changes compared with previous years. China is undergoing "high-quality development", the government continues to optimize expenditures, and the construction machinery industry has experienced previous changes. After a peak period, it entered an adjustment period. "This adjustment period is normal from the perspective of manufacturers. We judge that the construction machinery industry will begin to bottom out and stabilize this year."
The person said that from the perspective of the operating rate of 12 types of construction machinery equipment, there was a sharp decline in the year before last and last year, and it is gradually improving this year. Both year-on-year and month-on-month, it is bottoming out and stabilizing, but the overall operating rate is consistent with the peak period. There is still a certain distance compared to the rate.
Electrification penetration rate increases rapidly
Since the beginning of this year, there has been another noteworthy change in the construction machinery industry: the acceleration of the electrification trend.
Starting from 2023, with the breakthrough of electrification technology and the decline of battery prices, the payback cycle of electrified construction machinery will be greatly shortened, and the industrialization process will usher in a major breakthrough, especially in the loader and excavator industries.
From 2022 to 2023, the penetration rate of loader electrification will increase from less than 1% to 3.5%. In June this year, the sales volume of electric loaders was 1,570 units, a year-on-year increase of 418.15%, a month-on-month increase of 25.60%, accounting for 14.55% of loader sales, and the penetration rate is gradually increasing. In the first half of this year, the cumulative sales of electric loaders were 5,114 units, exceeding the full-year sales in 2023, a year-on-year increase of 361.14%, accounting for 8.97% of the cumulative sales of loaders.
In terms of electric excavators, sales in June this year were 16 units, a month-on-month increase of 128.57%. The cumulative sales of electric excavators in the first half of 2024 were 54 units. At the end of June 2024, Sany Heavy Industry (SH600031, stock price 15.30 yuan, market value 129.8 billion yuan) released its first overseas medium-sized electric excavator in the Netherlands and obtained 20 signed pre-sale orders, marking the domestic brand’s achievements in the European electrification market. New breakthrough.
Soochow Securities Research Report analyzes that the current electrification rate of global construction machinery is less than 1%. After judging technological breakthroughs and achieving sufficient cost reduction, the electrification penetration rate is expected to reach more than 30%. Taking excavators as an example, my country's excavator sales in 2023 will be about 195,000 units, which may bring an average annual demand for electric excavators of about 60,000 units.
According to Soochow Securities’ judgment, after the transmission efficiency bottleneck of electrified products is broken, the cost of electrified construction machinery will drop significantly, and after the economic efficiency is highlighted, the development boom of electrified construction machinery will usher in.
