Against the backdrop of a downturn in China's construction machinery industry in 2023, the industry bottomed out and stabilized in 2024, and the profit levels of construction machinery enterprises improved. Sales of all kinds of excavators and loaders are on the rise; The export value of construction machinery products has continued to grow but at a slower pace. The export prosperity of countries along the Belt and Road Initiative remains at a relatively high level, while new overseas contracted projects will effectively boost the export of construction machinery products. Profit levels of China's construction machinery enterprises will improve in 2024. In the future, overseas markets will continue to be an important support for domestic construction machinery enterprises.
Since 2024, the construction machinery industry has accelerated its transformation towards digitalization, intelligence and greenness. With the accelerated implementation of national measures such as large-scale equipment renewal and super-long-term special Treasury bonds, the effective implementation of relevant industrial policies, and the full promotion of major engineering projects, the construction machinery industry is expected to enter a recovery stage, and under the influence of many factors such as the natural renewal and elimination of existing machinery in the market, stricter environmental protection policies, the deepening trend of machinery replacing human labor, and the high export "sentiment", The rigid demand for construction machinery in China will continue to be released. Overall, the construction machinery industry is expected to maintain a stable development trend in 2025.
1. Current status of the industry
In 2024, the national economy will operate steadily with progress. Real estate development investment will remain sluggish, but sales of all kinds of excavators and loaders will increase, benefiting from year-on-year growth in fixed asset investment (excluding rural households). During the same period, steel prices on the cost side will generally "oscillate downward", and China 's construction machinery industry will bottom out and stabilize.
From the supply side, the upstream of the construction machinery industry mainly consists of raw materials and core components such as steel, iron, hydraulic parts and engines. Steel accounts for about 30 percent of the cost of construction machinery, according to China Commerce Industry Research Institute. The price fluctuations of steel and iron directly affect the production costs of construction machinery manufacturers and, in turn, their profitability.
In 2024, China's steel prices will generally show a "volatile and falling" trend. By the end of 2024, China 's rebar (model: HRB400E 20mm), galvanized coil (model: 1.0mm galvanized), hot-rolled coil (model: Q235, 2.75mm) and medium plate (model: Market prices for common 20mm were 3,497 yuan/ton, 4,171 yuan/ton, 3,588 yuan/ton and 3,577 yuan/ton respectively, down 14.18%, 18.38%, 14.86% and 13.05% respectively from the end of 2023.
China's cumulative steel exports reached 110.716 million tons in 2024, up 22.7% year-on-year, according to the General Administration of Customs. Exports totaled 595.01 billion yuan, up 0.4 percent from the previous year. Based on this calculation, the average price of China's steel exports in 2024 was 5,374.20 yuan per ton, down 18.2% year-on-year.
Figure 1.1 Main Steel Prices in China from 2018 to the End of 2024 (Unit: Yuan/Ton)
2. Industry Policies
Since 2024, with the accelerated implementation of national measures such as large-scale equipment renewal and ultra-long-term special Treasury bonds, the effective implementation of relevant industrial policies, and the full promotion of major engineering projects, it will provide a stable support for the market demand of construction machinery and drive the recovery of the industry. At the same time, with the continuous promotion of green development in manufacturing, green development will become a common form of new industrialization.
In terms of macro policies, according to data released by the Ministry of Finance, as of December 25, 2024, 4 trillion yuan of new special bonds have been issued (including 100 billion yuan of the 2023 carry-over quota), supporting more than 40,000 projects. More than 350 billion yuan of local special bonds were used as project capital, mainly in the transportation infrastructure sector, with a focus on major national strategic projects. In March 2024, The State Council issued the "Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods", and in July, the National Development and Reform Commission and the Ministry of Finance issued the "Several Measures on Strengthening Support for Large-scale Equipment Renewal and Trade-in of Consumer Goods", clearly stating that the National Development and Reform Commission will take the lead in coordinating and arranging about 300 billion yuan of ultra-long-term special Treasury bond funds. Strengthen support for large-scale equipment renewal and trade-in of consumer goods; In September, the Ministry of Industry and Information Technology released the "Guidelines for Equipment Renewal and Technological Transformation in Key Industrial Sectors" (hereinafter referred to as the "Guidelines"), which will carry out large-scale equipment renewal in 27 key industrial sectors, including construction machinery. In the construction machinery industry, the guidelines propose to focus on promoting the intelligent upgrading of production and manufacturing equipment and production lines, to update and transform all kinds of production equipment, process equipment, scientific research and experimental equipment, testing and experimental equipment, as well as auxiliary equipment such as warehousing and logistics, energy and power, safety and environmental protection, by 2027, the production efficiency of new products will be significantly improved and production costs will be significantly reduced. With the accelerated implementation of measures such as the country's large-scale equipment renewal and ultra-long-term special Treasury bonds, and the full-scale advancement of major engineering projects, it will provide a stable support for the market demand of construction machinery and drive the recovery of the industry.
In terms of environmental protection policies, in March 2024, seven departments including the Ministry of Industry and Information Technology jointly issued the "Guiding Opinions on Accelerating the Green Development of the Manufacturing Industry", proposing that by 2030, China's manufacturing industry will achieve remarkable results in green and low-carbon transformation, the overall level of green development of traditional industries will rise, and the proportion of green and low-carbon energy utilization will increase significantly; By 2035, the endogenous impetus for green development in manufacturing will be significantly enhanced, carbon emissions will peak and then decline steadily, carbon neutrality capacity will be steadily improved, green and low-carbon competitive advantages will be highlighted in the global industrial chain and supply chain, and green development will become a common form of new industrialization. In August 2024, the Central Committee of the Communist Party of China and The State Council issued the "Opinions on Accelerating the Comprehensive Green Transformation of Economic and Social Development", proposing to take carbon peaking and carbon neutrality as the lead, promote carbon reduction, pollution reduction, green expansion and growth in a coordinated manner, deepen the reform of the ecological civilization system, improve the mechanism for green and low-carbon development, and accelerate the comprehensive green transformation of economic and social development.
In terms of industrial policies, in 2024, China issued a series of policies to provide a favorable policy environment for the development of the construction machinery industry. The specific policies are shown in the table below:
3. Industry Risk concerns and credit Outlook
(1) Industry risk concerns
Figure 4.1 Cumulative Sales of Excavators in China from 2017 to the End of 2024 (Unit: 10,000 units)
The export value of China 's construction machinery products has continued to grow but at a slower pace, with the Belt and Road countries' export prosperity remaining at a relatively high level, and the newly added overseas contracted projects will effectively boost the export of construction machinery products. In the future, overseas markets will continue to be an important support for domestic construction machinery enterprises.
According to customs statistics, China's construction machinery import and export trade volume reached 55.45 billion U.S. dollars in 2024, up 8.59% year-on-year. Among them, the total imports were 2.591 billion U.S. dollars, up 3.17 percent year-on-year; Total exports were 52.859 billion U.S. dollars, up 8.87% year-on-year (up 9.59% year-on-year in 2023). The export value of China's construction machinery products continued to grow but at a slower pace, among which the export prosperity of countries along the Belt and Road remained at a relatively high level. In addition, from January to September 2024, Chinese companies signed new contracts worth 142.99 billion U.S. dollars in Belt and Road co-construction countries, up 22.5% year-on-year, which will effectively boost the export of construction machinery products. As China's construction machinery products enhance their overall competitiveness in the global market, overseas markets will continue to be an important driving force for domestic construction machinery enterprises in the future.
Raw material prices, exchange rate fluctuations and other factors may have an impact on the profit level of the construction machinery industry. The price fluctuations of raw materials such as steel and iron directly affect the production costs of construction machinery manufacturing enterprises; On the other hand, fluctuations in exchange rates caused by the uncertainty of the international situation will also affect their profit levels. In 2024, all major listed companies in China's construction machinery industry achieved profit growth.
(2) Industry credit outlook
Since 2024, the construction machinery industry has accelerated its transformation towards digitalization, intelligence and greenness. With the accelerated implementation of national measures such as large-scale equipment renewal and super-long-term special Treasury bonds, the effective implementation of relevant industrial policies, and the full promotion of major engineering projects, the construction machinery industry is expected to enter a recovery stage, and under the influence of many factors such as the natural renewal and elimination of existing machinery in the market, stricter environmental protection policies, the deepening trend of machinery replacing human labor, and the high export "sentiment", The rigid demand for construction machinery in China will continue to be released.
Overall, the construction machinery industry is expected to maintain a stable development trend in 2025.
