China’s four leading excavator companies SANY, XCMG, SDLG, and Liugong all issued price increases because of the rise in upstream raw materials.
According to a report by Construction Machinery Magazine, recently, Sany (600031.SH), XCMG (000425.SZ), SDLG, and Liugong (000528.SZ), the four major Chinese excavator brands, have issued price increases notices and decided that start from June 16, the price of small excavators will be increased by 10%, and the price of medium-sized excavators will be increased by 5%.
Among them, XCMG and SDLG made it clear that the price of 5-10t series excavators will be increased by 10%, and the price of 11-22t series products will be increased by 5%; Liugong models below 19 tons (excluding those under 5 tons) will be increased by 10%, 20-22 ton models will be raised by 5%.
According to the Tiejia Construction Machinery website, excavators can be divided into miniature, small, medium, large, and super large according to the tonnage of the whole machine. Under 6 tons are mini excavators, 6-12 tons are small, 13-25 tons are medium-sized, 25-45 tons are large, and more than 45 tons are super-large excavators.
Generally speaking, the price of small excavators is between 100,000 and 300,000 yuan, and the price of medium-sized excavators is between 500,000 and 600,000 yuan. Based on this estimate, the price of each small excavator of each brand will increase by 10,000 to 30,000 yuan, and the price of each medium-sized excavator will increase by 25,000 to 30,000 yuan.
According to the price adjustment letter issued by SANY, due to the continuous sharp increase in the price of bulk materials such as steel since last year, the global pandemic has also caused a greater impact on the upstream and downstream industrial chains at home and abroad, and suppliers are facing tremendous pressure, resulting in a substantial increase in comprehensive costs.
The price increase announcements of other manufacturers also show that the price increase this time is mainly due to the increase in raw material prices.
Following the large price increase, the price of China’s threaded steel reached its peak in mid-May. According to the China Iron and Steel Association, from June 7 to June 11, the China Steel Price Index (CSPI) was 148.34 points. Although it has fallen, it still increased by about 20% compared to the end of last year.
This is not the first price increase for excavator products this year. After the Spring Festival at the beginning of the year, the Hefei Construction Machinery Chamber of Commerce took the lead in raising prices and jointly promoted the price increase of the terminal sales of excavator products with nine agents in 3 provinces, involving Sany, SDLG, Liugong, XCMG and other Chinese excavator brands.
Among them, the price of excavators under 20 tons will be increased by 5,000-10,000 yuan/unit, 20–30 tons will be increased by 10,000 yuan/unit, and the price of excavators above 30 tons will be increased by 30,000 yuan/unit.
Also affected by factors such as the increase in the price of raw material steel, Zoomlion (000157.SZ) and XCMG have been shipping the full range of tower cranes and lifts from May 17 and June 1 respectively, and the prices are based on the net weight of the product. The increase is 1,000 yuan/ton, and the follow-up adjustment letter will be issued based on the rise and fall of raw materials.
SDLG announced that the loader settlement price will be adjusted upwards on the original basis starting from June 1. Among them, 30 series products will be increased by 8,000 yuan/unit; 40 and 50 series products will be increased by 10,000 yuan/unit; 60 series products will be increased by 15,000 yuan/unit; 70 series and above products will be increased by 20,000 yuan/unit.
The construction machinery magazine published an article saying that the unanimous price increase of the four major construction machinery manufacturers in China is based on the spontaneous market behavior of the current production, supply and marketing situation. From a long-term perspective, increasing the price of excavators is conducive to the symbiosis and co-prosperity of manufacturers and agents in the mining machinery industry chain, and it is also conducive to the long-term healthy development of the Chinese mining machinery industry.
The China Construction Machinery Industry Market Research Center previously investigated and analyzed that the survival status of the agent group is worrying. In the first quarter of this year, 41.22% of the agent companies suffered serious losses, 27.48% of the agent companies realized normal operations through the back feeding of the manufacturers, and only 31.3% of the agent companies were in a meager or profitable state.
Excavators are the most important sub-industry of the construction machinery industry and a barometer of the industry and infrastructure.
Since April this year, the industry’s concerns about the peaking of the sector’s prosperity have intensified. According to the statistics of 26 excavator manufacturers by the China Construction Machinery Association, a total of 46,600 units of various excavation machinery products were sold in April, a year-on-year increase of 2.5%. Among them, 41,100 units were sold to the Chinese market, a year-on-year decrease of 5.2%.
The decline in excavator sales in May increased. A total of 27,200 excavators of various types were sold that month, a year-on-year decrease of 14.3%. Among them, 22,100 units were sold in China, a year-on-year decrease of 25.2%.
As of the close at 15:00 on June 17, Sany’s stock price was 27.08 yuan per share, a slight increase of 0.59%; the total market value was about 229.8 billion. The intraday stock price was as low as 26.65/share, a record low in more than half a year.
On the same day, XCMG closed at 6.03 yuan, down 0.33%; Liugong closed at 8.28 yuan, up 0.61%.
Source: Jiemian News