Financial Services Association, May 13 (Reporter Huang Lu) The peak season for the March-May industry has arrived. Domestic sales of excavators were slightly higher than expected in April, and the decline in exports narrowed. The Financial Services Association reporter learned from people involved in the construction machinery industry chain that with the full resumption of work in April, factors such as temperature recovery and other factors drove the gradual implementation of investment projects in various regions, and domestic market sales improved year-on-year, but the May order schedule did not change much. The increase in orders from leading companies mainly comes from exports and is higher than the industry average.

According to the latest data released by the China Construction Machinery Association, domestic sales of excavators were 10,780 units in April this year, up 13% year on year. The increase increased month-on-month, and was better than previous CME expectations (the agency's forecast was the same as the previous year). The export was 8040 units, a year-on-year decrease of 13%, and the decline narrowed month-on-month.

(Data source: China Construction Machinery Association)

The “CCTV Financial Excavator Index” shows that in Q1 this year, the highest operating rate of major types of equipment was hoisting equipment, followed by excavation equipment. Meanwhile, the increase in the operating rate of excavation equipment indicates that there has been an increase in new construction projects this year. Domestic excavator sales data has been picking up for two consecutive months. How do you view the trend of the entire domestic construction machinery industry this year? Has an inflection point appeared?

At the recent performance briefing, Cai Shenglin, director of Sany Heavy Industries, said in response to a reporter from the Financial Association that the company believes that several factors will promote the construction machinery market in 2024: first, large-scale equipment updates will boost the market recovery as a series of policies such as the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-In” continue to advance; second, the global construction machinery market is vast, and there is huge room for global development of construction machinery; the third is to develop new quality productivity to promote the high-end, intelligent and green transformation of construction machinery, bringing new market opportunities. The penetration rate of new energy construction machinery will be further increased.

People related to Zhonglian Heavy Industries also believe that currently, the domestic market for the construction machinery industry is at the bottom of the cycle, but the national economy has generally rebounded and the overall upward trend is becoming more obvious. Infrastructure investment led by local government special bonds and special treasury bonds is expected to continue to have a supporting effect. Meanwhile, the State Council recently issued the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in”. Steady restoration of project volume and superposition of equipment renewal policies may speed up the steady recovery of the industry to a certain extent.

“Whether major equipment updates can lead to an increase in related orders still needs to be further observed.” An insider from a large steel company that supplies steel to leading downstream manufacturers told the Finance Association reporter that the company's market demand and orders improved slightly month-on-month in April, mainly due to an increase in the operating rate after the holiday season, but due to weak demand on the real estate and infrastructure side, demand orders from the domestic construction machinery sector have not changed significantly for the time being.

According to Wang Zhizhong, chairman of Lingong Group, judging from the domestic product sales structure, the share of small excavation and large excavation sales continues to grow, while the share of medium excavation sales is still shrinking; this means that the infrastructure construction sector in China, where demand for construction machinery is extremely high, and real estate is still in the adjustment stage. The prospects for the domestic market are still uncertain, and it is imperative for Chinese enterprises to go overseas comprehensively and at an accelerated pace.

According to many domestic construction machinery industry insiders, simply focusing on excavator data can no longer fully objectively reflect changes in the industry climate. A relevant person in charge of a leading manufacturer said bluntly, “If we only look at the domestic market, we often watch the sky and eat. It is very much related to the macro environment, but if we look at the global market, the volatility is much less. The positive domestic sales data for April strengthened the market's expectations for continued improvement in the industry.”

Judging from the business strategies of major manufacturers, “diversification+going overseas” has become a breakthrough in smoothing their cycle fluctuations, and is reflected in financial statements. In Q1 this year, many companies in the construction machinery industry, including Sany Heavy Industries and Liugong, entered the front line of new shareholding in social security.

In an exchange with the agency, Zoomlion Heavy Industries clearly stated that in the concrete and construction lifting machinery sectors, which are relatively highly correlated with real estate, the total domestic revenue in Q1 accounts for less than 15% of the company's total revenue, and the downstream itself is also constantly diversifying, and the correlation with real estate continues to decline; the influence of adverse factors in the domestic market cycle of construction machinery on the company's overall performance is already low.

Statistics show that the domestic excavator sales base from May to December last year was not high. The Financial Services Association reporter learned from communication with many manufacturers that they are still cautious about the recovery process of domestic sales demand for traditional machinery and equipment this year. We need to continue to observe when an upward inflection point will occur while touching stones across the river, but there is a consensus that this year it is likely to bottom out. Liu Gong believes, “If judged optimistically, 2024 should be the last period of a bottoming rebound. It is expected that the industry will once again show an upward trend in 2025.”