After a lapse of 14 months, the sales growth rate of excavators in July turned positive for the first time. The recovery of the medium and large excavation market related to infrastructure, real estate and mining industries was relatively slow, and the small excavation recovered better.
Reporters from the Financial Associated Press learned from various interviews that people in the machinery industry are cautious about "the statement of a strong turning point in the second half of the year". After the epidemic factor has subsided, the month-on-month data in July has indeed improved. Under the low base effect, the year-on-year data in the second half of the year will be better. At present, the pulling effect of infrastructure construction is not obvious, and the industry is still in a weak recovery.
However, compared with the fact that the demand-side heavy volume is still not obvious, the cost-side pressure of the construction machinery industry has improved. Wu Jianhua, a construction steel analyst at the Shanghai Steel Union Steel Business Group, told the Financial Associated Press that since mid-April, the epidemic has spread to extreme weather such as gradual prevention and control, the Federal Reserve's interest rate hike, the flood season in the south, and the high temperature in the north. Prices fell quickly.
The base effect weakened, and the sales growth rate in July turned positive
The latest data from China Construction Machinery Industry Association shows that in July 2022, 17,939 excavators were sold, a year-on-year increase of 3.4% and an increase of 14pct from June. Among them, domestic sales were 9,250 units, a year-on-year decrease of 25%, and the rate of decline narrowed by 10pct compared with June; exports were 8,689 units, a year-on-year increase of 73%, an increase of 15pct compared with June.
Specifically, in July 2022, the proportion of small mining sales increased by 9pct, small mining recovered better, followed by large mining, and medium mining recovered slowly. The heavy volume in overseas markets has smoothed out the weak demand in the domestic market. In terms of exports, the export sales volume in July was 8,689 units, a year-on-year increase of 72.8%. It was the fourth highest month-on-year increase in 2022.
"The base number in July last year was relatively low, and the growth of overseas markets is good at present." The relevant person in charge of Zoomlion (000157.SZ) told the Financial Associated Press.
"I haven't felt a significant recovery, and the actual data has improved slowly. It cannot be said that there is a (industry) inflection point. Previously, due to the epidemic, many projects were suspended, but now some projects have started, and the sales data (for excavators in July) will be better. point." An insider from a construction machinery company in Hunan told a reporter from the Financial Associated Press.
Although the proportion of small mining data has increased, the above-mentioned insiders revealed that under the current market conditions, selling small mining is basically not very profitable. Because in many cases, small excavators are sold with medium and large excavators.
A person from the securities department of Hengli Hydraulics (601100.SH), a leading upstream manufacturer, told the Financial Associated Press that the sales data in July was a little better than the same period last year.
The pulling effect of infrastructure is not obvious for the time being, and the weak recovery in the second half of the year is underway
It is understood that from the perspective of increased investment on the demand side, there has been a slight improvement, and the growth rate of investment is still declining. The growth rate of water conservancy, highway, and public infrastructure has rebounded, and investment in other related industries is not ideal, especially the decline in real estate under construction and new construction is still expanding. Industry insiders expect an improvement until Q4 at the earliest.
From the perspective of the market terminal, in the first three weeks of July 2022, the operating hours of market monitoring excavators in the domestic circulation field decreased by 16.55% year-on-year and 9.18% month-on-month. The above-mentioned person from the Hengli Hydraulic Securities Department said, "The main ones related to infrastructure are digging, and the increase in demand is not obvious at present."
An insider from another Hunan construction machinery OEM also told a reporter from the Financial Associated Press, "The improvement of terminal data is relatively slow, and the recovery is not as fast as everyone expected."
It may take time for the demand side to fully recover, but the cost-side improvement is already on the way, and the steel cost of the excavator OEMs accounts for more than 70%. According to the statistics of Shanghai Steel Federation, the overall price of rebar fluctuates widely this year. Last year, the steel price reached a high of 6,200 yuan/ton and a low of 4,500 yuan/ton. The price difference between high and low prices was nearly 1,800 yuan/ton.
As of August 12, the price of rebar futures was 4,189 yuan/ton. Sany Heavy Industry (600031.SH) insiders believe that the price of steel will not be as high as last year, and the profit pressure this year will not be as great as last year, and the industry is expected to pick up quarter by quarter in the second half of the year.
Data show that in July, a total of 3,876 major projects were started nationwide, with a total investment of 2,393.059 billion yuan. Among them, infrastructure projects are still one of the key areas of intensive construction in various places. The research report of Zheshang Securities pointed out that the pulling effect of infrastructure construction is expected to continue to be released in the second half of the year, forming a certain support, and the demand margin in Q3 is expected to improve. Noticeably narrowed. If the sales volume of excavators in August is 20,000 units, it will increase by about 10% year-on-year.
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