Analysis of Influence Factors of Excavator Sales

Excavating machinery has always been the most important product in the construction machinery industry. In 2011-2012, the sales volume of excavating machinery industry was ups and downs. Then, there was an inseparable relationship between the sales of excavating machinery and related industries. To sum up is nothing more than Roads, railways, airport construction, water conservancy construction, real estate development, urban construction, power construction, iron and steel, coal, mining and quarrying industries, and promotion of national policies.

1. Highways The total investment in highway construction in China increased by 8% in 2011, but if the price increase factor is deducted, the actual investment is basically the same as the previous year. The financing of road construction in various places is limited due to the tightening of money supply and the control of toll highways; therefore, after the significant increase in 2009-2010, the growth rate of investment in road construction has dropped significantly. Taking into account the large-scale highway network that has already been built, and the need to complete the national highway construction and improve the rural highway program, the investment in highway construction will not drop significantly, but the increase in expenditure will undoubtedly slow down.

By the end of 2011, the total volume of highway networks in the country has reached 4.08 million kilometers, of which the total mileage of highways has reached 85,100 kilometers, and its position in the entire highway network has obviously increased. The national expressway network has always been the focus of highway construction. Local governments are also actively building high-grade highways within the region. In addition, as an important part of the strategy for promoting rural economic development, rural highway construction has always been given priority. Taking 2005 as the statistical base year, the country added 551,000 kilometers of highways from 2006 to 2010, including 33,000 kilometers of expressways. The Ministry of Transport plans to increase the total length of highways by 500,000 kilometers between 2011 and 2015, and increase the highway by 34,000 kilometers. In addition, the proportion of road maintenance and renovation projects in road development plans will gradually increase.

2. The railway construction investment in 2011 was severely affected. Morality was due to the fact that senior government officials were replaced due to corruption issues. Then a high-speed train crash occurred in July. In 2012, the railway has invested 406 billion yuan in infrastructure construction, plans to build 5505 kilometers of new lines, and 5,160 kilometers of double-track tracks. In order to complete the 2004 medium and long-term railway development plan, about 800 billion yuan should be invested each year. The rapid development of the railway sector depends mainly on high-liability operations. It is expected that the total liabilities will exceed RMB 4 trillion by the end of the “Twelfth Five-Year Plan” period. Calculated at a slight 4% interest rate, the annual interest payable will reach a scale of RMB 160 billion.

High debt will force the reform of the railway sector, and new investment opportunities will surely be born. The three railway policies in 2012 sent a positive signal to the railway construction: “Guiding Opinions on the Invitation of Bidding for Railway Engineering Projects into Local Public Resource Trading Markets” clearly requires all railway engineering projects to enter local public resource transactions in accordance with the principle of ownership or authorization. Market bidding; “Implementation Opinions on Encouraging and Guiding Private Capital to Invest in Railways” issued on May 16 is almost fully open to private capital; On May 17th, 20 billion yuan of 365-day unsecured short-term financing bonds were tendered for issuance. The construction of the railway supports bright and the future railway construction will steadily advance.

3. Airports In 2011, China continued to expand its investment in airport construction. Five airports were newly built during the year. According to the National Civil Aviation Working Conference and Aviation Case Conference 2012, civil aviation fixed asset investment in 2012 will reach 158.5 billion yuan, of which 75 billion yuan will be invested in infrastructure construction.

During the “Twelfth Five-Year Plan” period, China will build 56 new airports, relocate 16 airports, and renovate (expand) 91 airports, and the industry’s capital construction investment will reach 425 billion yuan. The new airport is concentrated in the western provinces of Gansu, Qinghai, Xinjiang, and Sichuan, and the northeastern provinces such as Heilongjiang. The airport expansion is concentrated in cities such as Wuhan, Nanning, Chongqing, Harbin, Haikou, Ningbo and other provincial capitals, municipalities directly under the Central Government, or cities planning separately.

4. Water Conservancy Construction Water conservancy construction As a key area for improving people’s livelihood, the central government currently attaches great importance to this area. In order to meet the required investment, the central government has requested that 10% of the land transfer funds be used for irrigation and water conservancy construction, which may bring the total investment in the next 10 years to 4 trillion yuan. This means that the financing of water conservancy projects will be guaranteed to a large extent, and construction projects in this area will become the focus of equipment requirements. The ongoing South-to-North Water Diversion Project is speeding up the implementation of the first phase of the East and Middle Lines will accelerate construction, while the second phase of the investigation and the West Line will continue to carry out.

On June 21, 2012, the National Development and Reform Commission, the Ministry of Water Resources, and the Ministry of Housing and Urban-Rural Development formally issued the “Water Conservancy Development Plan (2011-2015)”. The total water conservancy investment will reach 180 million during the 12th Five-Year Plan period, and rural water conservancy will become “12. V. One of the key points of water conservancy investment, the country will continue to maintain a high investment intensity. In the future of water conservancy construction, construction machinery will play an important role and make great achievements.

5. Real Estate Development In 2011, the Central Government requested the construction of 10 million sets of affordable housing, and in 2012 it will increase by 7 million sets. This is considered an important measure to help improve the lives of low-income people and stimulate consumption. It is expected that the implementation of this policy will run through the entire "12th Five-Year Plan" period (2011-2015) and will support the entire housing construction market in the event of a reduction in the number of commercial housing projects.

In 2012, seven departments including the Ministry of Housing, Urban and Rural Construction issued notices to encourage and guide private capital to participate in the construction of affordable housing projects through direct investment, indirect investment, share participation, and commissioned construction. Banking financial institutions will also rely on The relevant provisions of the Circular on Doing Well the Financial Services for Public Rental Housing and Other Safeguarding Settlement Projects shall be actively supported in accordance with the principles of risk control and commercial sustainability.

6. Urban construction The country’s urban infrastructure construction has developed significantly. Urbanization of the population has continued to increase. In 2011, it exceeded 50% for the first time, reaching 51.27%. By 2020, China’s urbanization level will strive to reach 60%. According to relevant data, for every additional urban resident, the city needs to increase the investment in fixed assets by 500,000 yuan, and by increasing the urbanization rate by one percentage point, the rural population influx into the city will increase by 13 million (calculated by the population of 1.3 billion). Therefore, it will drive 6.6 trillion yuan of urban construction investment, so the investment in fixed assets brought about by the urbanization rate of less than 10% will be staggering. The continuous and rapid advancement of the urbanization process will surely provide a long-term and stable driving force for the development of the construction machinery industry.

7. Power construction investment in electric power construction is closely related to economic development and industrial production demand. After a slight decline in 2010, it remains stagnant in 2011. The investment is mainly used for the construction of power plants (the investment scale is reduced by 6.5%) and the power grid (the investment scale is increased by 6.8%). It is expected that the level of investment will show a flat trend in 2012, in which grid construction is still the focus.

The total capacity of China's generator assembly machines has been the second largest in the world since 1996, reaching a peak of 1.056 billion kilowatts in 2011. Coal telephony continues to dominate, but its share has fallen by 4 percentage points in the last five years and dropped to 73% in 2011. On the other hand, wind power and solar power have played an increasingly important role. The total ratio has increased from 1% in 2007 to 4% in 2011, but solar power accounts for only a small percentage. Hydropower and nuclear power respectively maintained a ratio of 22% and 1%. The government actively encourages the development of nuclear power, and the demand for such renewable energy power generation facilities will remain strong.

8. Steel China is the largest steel producer in the world. In 2011, crude steel production increased by 9% year-on-year to 683 million tons. Iron ore comes from imports and domestic mines, and its total demand has increased significantly in the past 10 years. Domestic production has doubled in the past five years. In order to reduce dependence on imported iron ore, the steel industry hopes to increase domestic iron ore production, which depends on finding and mining new mines. Among domestic iron ore production, Hebei accounts for 45%, followed by Liaoning, Sichuan, and Inner Mongolia, which account for 29% of the total. Shanxi and Anhui are also important production areas. The output of non-ferrous metals increased by 11% year-on-year to 34.2 million tons, with the central and western provinces being the most important producing areas.

9. Coal Coal is the main source of China's energy supply. At present, China is the world's largest coal consumer and producer. In 2011, China produced 3.52 billion tons of coal and net imports 170 million tons, which consumed 3.7 billion tons. Coal consumption accounts for almost half of the world's total. Experts expect that the national coal demand in 2015 will reach about 4.3 billion tons, an increase of about 970 million tons from 2010, an average annual increase of 5.2%.

10. The sustained economic growth of the mining industry and quarrying industry, driven by large-scale investment in various industries, has driven a substantial increase in the demand for raw materials, resulting in the continuous growth of domestic raw material production and breaking the historical record year by year. The continuous growth of output and integration of the mining industry have increased the demand for equipment.

Since 1985, China has been the world's largest cement producer. Although the growth rate is lower than the previous year, the output in 2011 has exceeded 2 billion tons, which is attributed to the vigorous development of the construction industry. The current integration of the cement industry has enabled large-scale cement companies to significantly expand their scale and become the main customers of limestone mining heavy machinery and equipment. On the other hand, in order to reduce excess capacity, the country will continue to shut down cement companies with lower efficiency.

11. Policy Promotion In 2012, planning and policies relating to the machinery industry were intensively introduced. As of August, 13 projects, including the "12th Five-Year Development Plan for Machinery Basic Parts, Basic Manufacturing Processes and Basic Materials Industry", were issued in total.