Domestic sales of key construction machinery outpace exports
From coal mining sites in Australia to construction projects in North America and Africa, Chinese-made excavators digging up coals or just simple dirt is a common sight. Heavy machinery is a necessity for mining and construction projects, making its sales of a valuable barometer of economic activities.
In China, the so-called “excavator index” is an often-utilized indicator to analyze and forecast construction activities. Given China’s leading role as a global supplier of machinery, the country’s export of excavators could also shed light in economic recovery around the world amid the COVID-19 pandemic, which has led to supply chains being severely disrupted and businesses seriously impaired.
Industry data in the first 11 months of year revealed that while domestic sales have seen a boom, exports orders were unsteady, albeit still recording continued growth – suggesting that constructive projects in the country picked up pace as the deadly virus was effectively reined in, while overseas projects faced uncertainties and disruptions due to repeated outbreaks of the novel coronavirus.
Solid recovery
Indicating a solid recovery around the world later in the year, overall sales of Chinese excavators skyrocketed last month. In November, total sales of various types of excavators jumped by nearly 67 percent year-on-year to 32,236, according to latest data from the China Construction Machinery Association (CCMA). That is a significant increase from around 61 percent year-on-year growth in October.
For the first 11 months, the country’s 25 leading excavator manufacturers sold a total of 296,075 units, up 37.4 percent year-on-year, with domestic sales rising 38.4 percent and exports increasing 28.8 percent, according to the CCMA.
Liugong Machinery Co, one of the industry’s bellwethers, told the Global Times on Tuesday that after orders abroad slowed down in the second quarter of this year due to the overseas impact brought by the coronavirus, businesses began to recover in the third quarter. Looking at the whole year, Liugong saw its sales achieve slight year-on-year growth this year, and significant increases in Africa, Europe and the US.
In the third quarter, Liugong Machinery Co’s revenue jumped 18.9 percent year-on-year to more than 5.3 billion yuan ($802.6 million), according to the company’s report.
The recovery of mining industry spurs the demand for excavators, Liugong added, noting that once the market demand release, order is bound to increase.
A president of a large domestic listed machinery company with large equipment including excavators to 40 countries including the US, Russia and the Middle East, told the Global Times on condition of anonymity that the reason for this year’s positive performance in large machinery exports in China was partially due to the fact that orders are place normally a year in advance.
“Thanks to the rapid production resumption in China after well contained the virus, the products can be delivered on time,” the source said.
The president said that although the overseas pandemic which was unchecked in many nations has caused the postponed placement for new orders for next year, demand abroad will recover back to normal if the pandemic is brought under control.
China is one of the global leading suppliers of the machinery still experiencing growth, with exports rising continuously over the past decade or so. From 2007 to 2019, China’s export of excavators rose by over 205.6 percent, according to industry data.
China leads
However, in line with a flurry of other indicators, the “excavator index” also points to a strong economic recovery in China over the rest of the world, with growth in domestic sales of excavators significantly outpacing that of exports.
In November, for example, domestic sales expanded by 68 percent year-on-year to 28,833, while export rose 57.8 percent to 3,403, according to the CCMA. Overall, in the first 11 months, domestic sales rose 37.4 percent year-on-year to 296,075 units, while export increased 28.8 percent to 30,530 units.
Excavators are widely used across Chinese industry, in addition to traditional infrastructure fields such as bridge and road repair, urban renewal, 5G base station construction and charging pile construction targeting new infrastructure will also boost the demand for small and micro excavators.
Annual sales of excavators are expected to be close to 300,000 units, with the annual sales growth to exceed 25 percent, according to industry insiders.
A sales manager with a Shandong-based excavator trading companies surnamed Li told the Global Times that the company has put more attention in domestic market after expecting a weakened demand overseas next year amid the continued outbreak.
“Our overseas orders achieved a slight increase at around 5 percent growth this year, which is much less than that of the domestic orders, which saw an even bigger growth at nearly 40 percent year-on-year,” said Li, noting that given the limited production capacity, they will have to pick the most potential market and there are much uncertainties in the ongoing pandemic in many parts of the world that might disrupt construction projects.
The IMF projected that China’s GDP will grow by 1.9 percent in 2020, up from 1 percent in its last projection in June, citing a faster-than-expected recovery in China. China will be the only major economy to achieve growth this year, according to the IMF’s latest report in October.
Workers check excavators at a factory in Qingdao, East China’s Shandong Province in October. Photo: cnsphoto
