Mid Year Inventory: Key Events in The Mechanical Industry In The First Half of 2024

On January 9th, according to statistics from the China Construction Machinery Industry Association on major excavator manufacturing enterprises, a total of 195018 excavators were sold throughout 2023, a year-on-year decrease of 25.4%. Among them, there were 89980 domestic units, a year-on-year decrease of 40.8%; Export 105038 units, a year-on-year decrease of 4.04%.

◎ From January 15 to 16, more than 150 overseas customers from more than 20 countries and regions, including Saudi Arabia, Türkiye, Indonesia and Malaysia, gathered in Changsha to participate in the annual meeting of Zoomlion Engineering Crane Co., Ltd. At the event site, the signed orders exceeded 1 billion yuan, winning a "good start" for the development of Zoomlion Heavy Industry Engineering Cranes overseas in 2024.

On January 18th, the CCTV Finance Excavator Index showed that the national construction machinery operating rate in 2023 was 58.57%, outperforming the overall performance of 2022. From a provincial perspective, Anhui, Jiangxi, Zhejiang, and Hubei have far ahead annual operating rates, ranking among the top four in the country with 76.78%, 75.44%, 74.09%, and 72.04% respectively. In terms of equipment, the average operating rate of lifting equipment is 73.03%, ranking first among all types of equipment; The average annual operating rate of mining equipment is 61.18%, ranking second, with a small peak in operating in the second and fourth quarters.

On January 19th, data from the National Bureau of Statistics showed that in 2023, the cumulative production of excavators in China was 235765 units, a year-on-year decrease of 23.5%.

◎ On February 27, Chinese Loong Industry and Ningde Times held the signing ceremony of the strategic cooperation agreement. Previously, another giant in construction machinery, Lingong Heavy Machinery, also signed a strategic cooperation agreement with Ningde Times. Under the promotion of the "dual carbon" strategic goal, the energy transformation of the construction machinery industry is urgent. Lingong Heavy Machinery Co., Ltd. and Chinese Loong Engineering Co., Ltd. strengthen cooperation with Ningde Times, which will help to accelerate the development of battery technology in construction machinery and help the construction machinery industry fully realize electrification.

On March 13th, the State Council issued the Action Plan for Promoting Large scale Equipment Renewal and Consumer Goods Exchange. It is mentioned that we will promote the upgrading and transformation of equipment in key industries. Focusing on key industries such as machinery, we will vigorously promote the updating and technological transformation of production equipment, energy consumption equipment, and power generation and distribution equipment. Strictly implement mandatory standards for energy consumption, emissions, safety, and equipment obsolescence, and eliminate substandard equipment in accordance with laws and regulations. Support the renewal of old agricultural machinery. Accelerate the elimination of operating diesel trucks with National III and below emission standards, and continue to implement subsidy policies for scrapping and updating agricultural machinery.

On March 22, Zhejiang Dingli announced that the company plans to invest in the construction of a new energy high-altitude operation platform project with self raised funds, with an annual output of 20000 units. The total investment for the project is 1.7 billion yuan. According to the announcement, after the project is completed and put into operation, it is expected to achieve an annual sales revenue of about 2.5 billion yuan in normal years.

On March 27th, the Ministry of Housing and Urban Rural Development issued a notice on the implementation plan for promoting the updating of construction and municipal infrastructure equipment. It is mentioned that construction equipment should be updated and phased out in accordance with the requirements of the "Technical Specification for Inspection of Mechanical Equipment on Construction Sites" (JGJ160) and other regulations. Construction machinery and equipment that have been in use for more than 10 years, are highly polluting, energy consuming, severely aged and worn, and have outdated technology should be replaced, including excavation, lifting, loading, concrete mixing, elevators, bulldozers, and other equipment (vehicles). Encourage the renewal and purchase of new energy, new technology engineering machinery and equipment, as well as intelligent construction equipment such as intelligent elevators and construction robots.

On March 27th, the Ministry of Industry and Information Technology and seven other departments jointly issued the Implementation Plan for Promoting Equipment Updating in the Industrial Sector. It is proposed to accelerate the replacement of outdated and inefficient equipment. Accelerate the elimination of outdated and inefficient equipment, as well as outdated equipment that has exceeded its service life, in industries where production equipment such as industrial mother machines, agricultural machinery, engineering machinery, and electric bicycles are generally at a medium to low level. Key efforts will be made to promote the upgrading of machine tools in the industrial mother machine industry, which have been in service for more than 10 years. The engineering machinery industry updates hydraulic presses, bending machines, outdated production lines, and online testing equipment.

On March 27th, the European Commission issued a statement, deciding to launch a countervailing investigation into the complete machine and complete set of components of mobile lifting operation platforms originating in China. The European Commission believes that the quantity and price of imported products under investigation have had a negative impact on the sales volume, fee levels, and market share of the alliance industry, leading to significant adverse effects on overall performance and financial condition.

On April 9th, Anhui Heli announced plans to acquire and increase capital of Anhui Yufeng Intelligent Technology Co., Ltd. (hereinafter referred to as "Yufeng Intelligent") for 370 million yuan, which will promote the company's transformation and upgrading to an intelligent logistics integrator. After all transactions are completed, Anhui Heli will hold 71.4172% equity in Yufeng Intelligent, becoming its controlling shareholder.

On April 26th, the Hunan Provincial Administration for Market Regulation and the Hainan Provincial Administration for Market Regulation jointly approved the release of the local standard "General Technical Requirements for Maintenance and Remanufacturing of Mobile Phones for Export of Construction Machinery". The release and implementation of local standards is conducive to promoting the standardized, large-scale, and environmentally friendly development of the engineering machinery remanufacturing export industry.

◎ On April 28, Chinese Loong Group joined hands with Ningde Times to launch a new generation of loaders with long-life batteries. This is another major measure of joint cooperation after the signing of a strategic cooperation agreement in February this year, which sparked a wave of electrification in the loader industry. The battery system equipped on this entire product adopts a new generation of long-life battery cells, which have a lifespan increase of more than 60% compared to the original product. The high-energy combination of integrated electrical box structure and new generation battery cells increases the overall power consumption by more than 30%.

On May 7th, Xingbang Intelligent Brazil subsidiary officially opened. This is an important milestone for Xingbang Intelligence in the South American market and another important strategic node for global layout.

On May 20th, the construction project of the Hangcha Intelligent Annual Production of 10000 sets of Automation Equipment Production Base in the fourth phase of Hangcha Science and Technology Park officially began. The total planned investment for this project is 1.016 billion yuan. After completion, it is expected to have an annual operating income of 1.03 billion yuan, tax payments of about 70 million yuan, and an additional employment of about 400 people. The project is expected to be completed and put into operation by the end of 2025.

On May 22, 2024, the Engineering Machinery Industry Cooperation and Matchmaking Conference between Henan and Hunan provinces was held in Zhengzhou. A total of 150 well-known enterprises in the engineering machinery industry chain from Henan and Hunan provinces participated in the conference. At the meeting, 11 enterprises from Henan and Hunan provinces, including Sany Heavy Industry, Zoomlion Heavy Industry, and Luoyang Bearing Group, signed a series of cooperation agreements with a total signing amount of 450 million yuan.

On June 3rd, the People's Government of Hainan Province issued the Implementation Plan for the Continuous Improvement of Air Quality in Hainan Province (2024-2025). The plan clearly states that by 2025, the phenomenon of "black smoke" emitted by non road mobile machinery will be basically eliminated, and non road mobile machinery with national emission standards of Class I and below will be basically phased out.

On June 3rd, the mixed ownership reform project of Xuzhou XCMG Automobile Manufacturing Co., Ltd. (hereinafter referred to as "XCMG Automobile") was officially listed and accepted registration on the Huaihai Property Rights Exchange, marking a substantial new progress in XCMG's mixed ownership reform. XCMG Auto plans to introduce strategic investors and implement equity incentives through a combination of equity transfer and capital increase, with a total fundraising of approximately 7.174 billion yuan. This mixed ownership reform plans to introduce about 15 strategic investors. Based on the actual situation, it is planned to increase capital and expand shares by introducing 5-8 investors, and transfer equity by introducing 9-12 investors.

On June 11th, Hangcha Group announced that the company has decided to establish a wholly-owned subsidiary, Hangcha Indonesia Limited, with a registered capital of 2 million US dollars. Its business scope includes the sales and services of forklifts, tractors, intelligent industrial vehicles, high-altitude work vehicles, material handling machinery and equipment, warehousing equipment and their accessories.

On June 12th, KHL Group in the UK released the "Top 50 Global Construction Machinery Manufacturers 2024" list. The total sales of the 50 construction machinery host manufacturers on the list in 2023 reached a historic high of 243.4 billion US dollars, with a year-on-year increase of 5.5%. Thirteen Chinese enterprises were listed in the top 50, including XCMG, Sany Heavy Industry, Zoomlion Heavy Industry, Liugong, Shantui, Chinese Loong, Lingong Heavy Machinery, Railway Construction Heavy Industry, Zhejiang Dingli, Shanhe Intelligent, Tongli Heavy Industry, Foton Lovol, and Simbond Intelligent. The three new members on the list are all from China, namely Lingong Heavy Machinery, Tongli Heavy Industry, and Xingbang Intelligence.

On June 14th, the European Union released a summary of the proposed temporary tariffs on Chinese enterprises producing high-altitude work platforms, with the highest tax rate reaching 56.1%. Among them, temporary tariffs were levied on sampled Chinese enterprises, with Xingbang Intelligent levying 56.1%, the highest proportion. Zhejiang Dingli collects 31.3%, Trex (Changzhou) collects 25.6%, and Jieerjie (Tianjin) collects 23.6%. A temporary tariff of 32% will be imposed on other Chinese enterprises that have cooperated with the investigation but have not yet been sampled, including XCMG Group, Zoomlion Heavy Industry, Liugong Machinery, Lingong Heavy Machinery, Hangcha Group, Shandong Chufeng Heavy Industry, Pulefu (Shandong) Industrial Equipment, Meitong Heavy Industry, Shandong Qiyun Group, Jinan Juxin Machinery, and Shandong Yuntian Intelligent Machinery. A temporary tariff of 56.1% will be uniformly imposed on Chinese high-speed machinery manufacturers who did not participate in the investigation.