Construction Machinery Industry Looks To Build On Strong Year

- Jan 14, 2019-

China's construction machinery industry is expected to increase at a slower and more stable pace in 2019, following some strong sales last year, analysts said.

The words came as latest data showed that sales by China's 25 leading excavator manufacturers surged 45 percent year-on-year in 2018. Excavators, a major type of construction machine, are a key indicator of the industry's robustness.

Between January and December, a total of 184,190 excavators were sold in the domestic market, up 41.1 percent from a year earlier, while overseas sales rose 97.5 percent to 19,100 machines, data from China Construction Machinery Association showed.

Lyu Ying, deputy secretary-general of China Construction Machinery Association, said the construction machinery industry would maintain its momentum this year.

The main drivers will be a demand for replacing machines, favorable policies and clients' need to purchase high-tech products, Lyu said.

Given the prospects for stable economic expansion, Lyu estimated that sales of construction machinery in China would grow 10 percent year-on-year in 2018, slower than the previous year.

Liu Jun, a senior analyst with Northeast Securities, said the sector would show strong resilience in the future, as the government has begun to further boost domestic demand.

China's construction machinery sector began its recovery in 2016, after dipping through a four-year recession. Sales by China's main excavator manufacturers almost doubled in 2017. However, after about two years of fast-pace expansion, the industry's growth rate slowed down in China, as the global market returned to moderate growth.

Thomas Pellette, group president for construction industries at United States-based Caterpillar Inc, said though the growth pace had slackened off in recent months, he is hopeful. "We expect to see growth in 2019," he said.

As for the Chinese market, Chen Qihua, chairman of Caterpillar China, held a "cautiously optimistic" attitude toward the industry's future development. Chen said the excavator sector is expected to remain stable this year.

Construction machine sales are considered an indicator of the vitality of a country's economic activity, as growing demand for the sector is usually backed by booming mining and infrastructure development.

China will keep its economic growth in 2019 within a reasonable range, State-owned media Xinhua News Agency reported, citing a top-profile meeting. The government will further stabilize employment, the financial sector, foreign trade, investment and market expectations, it said.