The "Steel Demand" of Construction Machinery Expected to Warm Up Mildly in 2023?

Downstream data

According to the statistics of China Construction Machinery Industry Association, in December 2022, 26 excavator manufacturers sold 16869 excavators of all kinds, down 29.8% year on year, including 6151 excavators in China, down 60.1% year on year; 10718 sets were exported, up 24.4% year on year. In December, 22 loader manufacturers sold 8417 loaders, down 4.97% year on year; Among them, 5162 units were sold in the domestic market, down 18.3% year on year; The export sales volume was 3255 units, up 28.1% year on year.

From January to December 2022, 26 excavator manufacturers sold 261346 excavators, a year-on-year decrease of 23.8%; Among them, 151889 were in China, down 44.6% year on year; 109457 sets were exported, up 59.8% year on year. From January to December, 22 loader manufacturers sold 123355 loaders of various types, a year-on-year decrease of 12.2%; Among them, the domestic market sales volume was 80894, down 24% year on year; The export sales volume was 42461, up 24.9% year on year.

Lange comments

In 2022, the construction machinery industry showed an obvious feature of stronger external demand than domestic demand. In terms of the domestic market, driven by the comprehensive implementation and effectiveness of the economic stabilization package and follow-up measures and the financial and financial policies to support the construction funds of major projects, many parts of the country grabbed the construction golden period and accelerated the construction progress of major engineering projects. The supporting role of infrastructure projects for construction machinery is relatively obvious, but due to the drag of the real estate industry, The sales volume of domestic construction machinery showed a sharp decline, while the export market of construction machinery showed a sharp growth trend.

According to the monthly sales data of excavators, the monthly sales of excavators in 2022 showed a trend of rising, falling and then rebounding. From the year-on-year growth rate of a single month, only five months achieved a year-on-year flat or positive growth, and the remaining seven months were significantly negative growth (see Figure 1); The year-on-year growth rate of domestic single month sales only achieved a positive growth of 1 month, and the other 11 months were negative growth; The export market performance is relatively strong, and the year-on-year growth rate of sales in a single month of the whole year has achieved positive growth, with a maximum increase of more than double. From the sales data of excavators in the whole year, the sales of excavators in 2022 fell by nearly a quarter year on year, among which the domestic market sales fell by more than 40%, while the export market increased by nearly 60%, indicating that the excavator market showed an obvious trend of stronger external demand than domestic demand in 2022.

In the same period, according to the monthly sales data of loaders, the trend of the monthly sales of loaders in 2022 is basically the same as that of excavators, and also shows the trend of rising, falling and rebounding. From the year-on-year growth rate of a single month, only four months have achieved positive year-on-year growth, and the other eight months have significant negative growth (see Figure 2); The year-on-year growth rate of domestic single month sales only achieved a positive growth of 2 months, and the other 10 months were negative growth; The export market performance is not as strong as that of excavators. The year-on-year growth rate of sales in a single month of the year has only achieved a positive growth of 10 months, with a maximum growth of more than 60%, and the other two months have negative growth. From the sales data of loaders in the whole year, the sales of loaders in 2022 fell by more than 10% year on year, among which the domestic market sales fell by nearly a quarter, while the export market increased by nearly a quarter, which indicates that the loader market in 2022 also showed the characteristics of stronger external demand than domestic demand.

From the demand side of the construction machinery industry, real estate and infrastructure are its main downstream demand side. For the real estate industry, in 2022, favorable policies for the real estate industry were continuously introduced, but the central economic work conference set the tone and still insisted on "no speculation in real estate". At this stage, the regulation of the real estate industry is mainly to prevent the rapid decline of house prices and form systemic risks. In 2022, the real estate regulation will mainly focus on lifting the loan and purchase restrictions, guaranteeing the delivery of buildings and policy housing, mainly to solve the capital problem of the real estate development end. At present, there is no effective measures at the mortgage end, and the owners' willingness to purchase houses is still insufficient, resulting in a decline in the real estate construction area, investment completion and new construction area. At the Central Economic Work Conference held from December 15 to 16, 2022, when deploying the real estate work in 2023, it was emphasized that: to effectively prevent and resolve major economic and financial risks, to ensure the stable development of the real estate market, to do a solid job in ensuring the delivery of buildings, people's livelihood and stability, to meet the reasonable financing needs of the industry, to promote industry restructuring and mergers, to effectively prevent and resolve the risks of high-quality real estate enterprises, and to improve the balance sheet situation. The meeting also pointed out that policies should be implemented according to the city to support the demand for rigid and improved housing, solve the housing problems of new citizens and young people, and explore the construction of long-term rental housing market. We should adhere to the positioning that houses are used for living, not for speculation, and promote the smooth transition of the real estate industry to a new development model. The core logic of the real estate policy in 2023 is: first, to provide financing support to the real estate enterprises, support the debt extension of the real estate enterprises, alleviate the financial pressure, and stabilize the expectations of the market participants; The second is to provide support for individual housing purchase credit and drive the recovery of market sales; The third is to "guarantee the delivery of the house", solve the problem of the delivery of the house in advance, boost the market sentiment and stabilize the confidence of the house buyers. Therefore, it is expected that the investment in the real estate industry will gradually stabilize in the second half of 2023 and is expected to turn to positive growth, and the completion growth rate will be significantly improved, but the growth rate of new construction is still a major drag.

For the infrastructure industry, in 2022, infrastructure investment will become the most important grip for stable growth and the key pillar of fixed asset investment. From the perspective of the bid-winning situation of infrastructure projects, the bid-winning amount of infrastructure projects in 2022 showed an obvious trend of rising quarterly. The total bid-winning amount of infrastructure projects in the first quarter exceeded 1207.4 billion, the total bid-winning amount in the second quarter exceeded 126.7 billion, the total bid-winning amount in the third quarter exceeded 1926 billion, the total bid-winning amount in the fourth quarter exceeded 3385.7 billion, and the total bid-winning amount of infrastructure projects in 2022 was about 6866 billion. From the perspective of capital situation of infrastructure projects, "moderately ahead of schedule" will be carried out at the beginning of 2022

”Under the guidance of the government, 3.65 trillion yuan of special bonds will be put into use before the end of August, and the balance limit of more than 500 billion yuan of special bonds will be implemented in the fourth quarter. 600 billion yuan of policy-oriented development financial instruments will be set up in two batches, and 800 billion yuan of policy-oriented bank credit lines will be increased to jointly promote the steady growth of infrastructure investment. The Central Economic Work Conference pointed out that "government investment and policy incentives will effectively drive the investment of the whole society, speed up the implementation of the" 14th Five-Year Plan "major projects, strengthen the connectivity of infrastructure between regions, and increase the financing support for major projects in line with the national development plan. Therefore, it is expected that the growth rate of infrastructure investment will remain resilient in 2023, and the growth rate may remain around 6-8% due to the high base of the previous year.

On the whole, the construction machinery industry will gradually step out of the downward cycle in 2023, and the domestic market will hit the bottom and stabilize under the continuous promotion of macroeconomic favorable policies, with the new demand slowing down and the renewal demand taking the lead; At the same time, the export market will remain resilient, but the growth rate will slow down. For the "steel demand" of construction machinery, major engineering projects in 2023 will shift from the "commencement season" to the "construction season", and the construction progress and intensity will be significantly better than last year. The release of the "steel demand" of infrastructure construction will be effectively guaranteed, which will form a significant support for the end demand of the construction machinery market. At the same time, with the improvement of profits and the return of orders of construction machinery manufacturing enterprises, the release of manufacturing steel demand of construction machinery enterprises will also be better than last year.