March weak demand for construction machinery late or slow recovery

According to the survey of construction machinery dealers in March, we expect the sales of construction machinery to remain weak in March. Dealers generally reflected that the current recovery in construction started was not satisfactory, and the low level of machine utilization did not significantly improve. We expect the sales of construction machinery will remain weak in March.

We also saw some positive factors this month. The recovery in the growth rate of industrial consumables production production deserves attention. Confirmation indicators such as credit, investment, and new real estate start-ups are even more critical.

Summary of the report February sales of construction machinery increased year-on-year. Non-actual demand recovery: We believe that the factors of the Spring Festival this year are the main reasons for the year-on-year sales and chain recovery in February and do not reflect actual demand. Take the excavator as an example, this year's normal seasonal pattern should support the February sales to increase by 180% to 200%, and the actual chain price is up by 199%, which is in line with the seasonal pattern. However, the year-on-year decline in data has dropped from 55% to 24%.

We estimate that the excavator sales in March will reach 24,000 to 28,000 units: According to historical experience, excavator sales in March this year were about 1.2 times the sales in January and February.

Combined with the seasonal pattern, we estimate sales of 24,000 to 28,000 units in March, down from 35% to 45% year-on-year.

The demand for cement and steel has recovered, and attention has been paid to the indicator for confirmation of investment in the latter part of the period: From February, the consumption of industrial consumables showed a year-on-year growth despite the year-on-year negative growth in demand for consumables such as railway steel and petroleum asphalt. Some rebound. We believe that due to the loosening of credit policies at the beginning of the year and the fact that some projects such as railways and real estate have shifted from suspension to resumption, the demand for industrial products has been driven to some extent. As the demand for industrial consumables is a leading indicator of capital goods, the demand for construction machinery in the latter period is weak or eased. The late start of credit policy, real estate construction and infrastructure projects is more crucial.

February sales of construction machinery increased year-on-year. Non-actual demand recovery In February, the year-on-year growth of sales of construction machinery showed a certain degree of recovery. However, we believe that the factors of the Spring Festival this year are the main reasons for the year-on-year sales and chain recovery in February. Does not reflect actual demand. Take the excavator as an example, this year's normal seasonal pattern should support the February sales to increase by 180% to 200%, and the actual chain price is up by 199%, which is in line with the seasonal pattern. However, the year-on-year decline in data has dropped from 55% to 24%.

According to the survey of construction machinery dealers completed on March 18, the company's response to the improvement in demand is not obvious. Overall, dealers still reflect the current weak demand, low operating rate, and relatively low machine hours. Demand from the northern region improved significantly in March, but seasonal factors are still the most important source of growth. The growth rate of the southern region in March has been relatively limited, which is partly due to the earlier Spring Festival this year and the advent of the peak season.

The improvement of demand in individual regions is worthy of attention: The general agent of a foreign-owned brand Shanxi excavator reflects that the current demand growth in Shanxi is quite obvious. The municipal engineering and mine demand have all obviously increased. At the same time, Shanxi heavy truck dealers have similar feedback. The recovery of regional development in the later period deserves attention.

We estimate that the excavator sales in March will reach 24,000 to 28,000 units: According to historical experience, excavator sales in March this year were about 1.2 times the sales in January and February. Combined with the seasonal pattern, we estimate that sales volume will be 24,000 units to 28,000 units in March, a year-on-year decline of more than 35% to 45%.

The demand for cement and steel has recovered, and there is a clear relationship between the increase in demand for construction machinery and the increase in investment scale in downstream industries. Therefore, investment in downstream infrastructure and extractive industries will determine the demand environment for construction machinery equipment.

However, it is more difficult for the construction of infrastructure and there is no better means of observation, and there is no effective observation of high-frequency indicators of infrastructure construction. Therefore, we can observe the strength of infrastructure through industrial consumer goods built in infrastructure. Judging from the current demand conditions in the fields of steel, cement, and asphalt, these major industrial consumer goods are in a state where the growth rate of output continues to decline or even negative. Therefore, under the conditions of downstream infrastructure investment and other areas, the demand for construction machinery is hard to see substantial recovery.

From February's situation, although the demand for infrastructure products such as railway steel and petroleum asphalt continued to show negative growth year-on-year, there was some rebound in the year-on-year growth of industrial consumables production. We believe that due to the loosening of credit policies at the beginning of the year and the fact that some projects such as railways and real estate have shifted from suspension to resumption, the demand for industrial products has been driven to some extent. As the demand for industrial consumables is a leading indicator of capital goods, the demand for construction machinery in the latter period is weak or eased.

The late start of credit policy, real estate construction and infrastructure projects is more crucial.