Excavator manufacturers in China aren’t kidding themselves about the likely effects of the latest stimulus commitment from the government, according to a Reuters report.
The March quarter saw an increase in excavator sales, and that was before the stimulus was announced, so one would have thought the industry would be optimistic. Not so.
Apparently, the first quarter growth figures were the result of new emissions regulations coming into play imminently that saw buyers rushing to secure a decent deal ahead of implementation deadlines, the report said.
With that surge now largely over having spent a big portion of industry demand, the resultant fall in appetite for new excavators is expected to combine with an overhang from the boom years to choke off any further growth.
The major problem, according to those manufacturers and dealers Reuters spoke to, was the previous series of stimulus packages that powered China through the global economic recession. This resulted in huge overcapacity as manufacturers tried to keep up with what was essentially artificial demand.
Today, only 20-25% of capacity is used in most factories and dealers sell two used machines for every new one.
“The impact of government investment seems to be not as strong as previously, which could be because there are too many machines out there already,”, vice president of the Shantui Construction Machinery domestic sales division vice president, Liu Chunyu, said.
“We know the breakneck growth we saw back in 2010 will never come back again.”
Perhaps it’s time we all faced this reality.
Source: Mining Journal
