Jonnie Keys, general manager of Euro Auctions, comments on the trends in 2012 for new and used machinery and construction equipment. He looks at which world projects are influencing world buying trends, who is buying and who is selling, and where the next ‘hot spots’ will be.
This year saw a real change in the global market providing new opportunities, a few surprises, as well as a number of predicted trends.
In early 2012 major manufactures of machinery and construction equipment were manufacturing again and new stock was feeding through into the market. New machinery and construction equipment has commanded higher prices during the past 12 months, heightening the demand for quality second-hand equipment, with certain models even making premiums.
Europe – East and West
With UK construction output dropping by 4.8% in early 2012 according to the Office for National Statistics data, Euro Auctions has repeatedly seen over 50% of all plant sold at auction leaving the UK and Europe for projects in Australia, South Africa, South America, Central America and India. With the UK still looking for large construction or infrastructure projects to commence in the wake of the Olympics, or house building to ignite, the future for the used construction machinery market is overseas.
UK prices of good second-hand equipment held through 2012 with 12 to 24 month-old equipment reaching premium prices. As the market shifted, good 24 to 48-month old stock became the premium target with world buyers being more specific. Mining and extraction equipment was in high demand with large dump trucks at the top of the list.
Emerging markets are always the first to be seen at auction and India is a regular new participant with an appetite for small to medium-sized construction machines. Large quantities of equipment continue to be shipped through Africa bound for destinations such as India, South America and Australia.
Generally European construction declined during 2012 with the eurozone crisis the chief cause. The inability of governments in the EU to embrace infrastructure and investment projects is taking its toll. Single-digit declines are expected across Europe; however, the UK, France and Germany are still the most buoyant markets with over 70% of the EU total.
The signs are that Austria, Italy and Portugal will continue to grow and have more of an appetite for machinery and equipment.
The Nordic region also experienced growth in 2012 with Denmark, Norway, Finland and Sweden showing growth of approximately 2%.
Germany emerged as the strongest buyer of construction equipment in Western Europe during the past 24 months with acquisition up by approximately 70% over 2009. Increased construction output in Eastern Europe is being led by Poland with a 34% increase on output due to large infrastructure projects. Russia also showed an increase in demand due to large civil engineering projects leading up to the 2014 Winter Olympics and the 2018 FIFA World Cup.
As expected, Spain continues to be a casualty with its market falling by an additional 20% in 2012. With equipment to sell, the countries of North Africa have an eye for the Spanish market. In 2007 machinery sales in Spain represented approximately 10% of the European market. Today that figure is closes to 2%.
Equipment has been moving out of the eurozone and more than 50% of all plant sold at auction or through dealer networks in 2012 has left Europe, with much of that stock destined for southern hemisphere countries to meet requirements for projects in Australia, South Africa, South America, Central America and India.
Australia was buoyant through 2012 with an ongoing demand for specific ranges of equipment. While there has been a slowdown over the past 12 months, this is still an exceptionally strong market with much demand in broad categories of mining and mining utilities.
With activity in the UAE construction sector flattening during late 2011 and many contractors experiencing tougher times due to approximately $719bn (€554.5bn) of construction projects being put on the back-burner or shelved, much machinery and construction equipment has stood idle across the region and
market activity flattened over 2012.
Heavy equipment destined for infrastructure is now moving out of the Middle East, whereas previously the trend was to ‘hang on’ to machinery until the price changed. With smaller projects still moving forward, there is a need for lighter machines such
as graders, dozers, backhoes and wheeled loaders.
Due to high oil prices, renewed infrastructure investment is being planned with projects worth $172bn being announced in the Middle East region. This may well be the start of a demand for machinery and construction equipment across the region.
With new infrastructure projects under way in the region, including the construction of 5,000km of highways in Brazil and four major initiatives worth an estimated $30bn in Columbia (including highways, seaports, airports, railways and river ways) Latin America is really beginning to boom. Heavy construction equipment and mining machinery is in real demand, with buyers from South America looking for quality excavators and other specialised plant, particularly from manufacturers like CAT and Hitachi.
China became a tour de force in the global market, buying better equipment in addition to manufacturing equipment based on popular international designs for its home market. The Chinese home market still has a great demand for less sophisticated equipment so opportunities exist for most makes and models of earlier kit.
The Chinese equipment market saw annual growth of approximately 29% between 2005 and 2011. However, while the economy in China is still strong, in 2012 equipment sales to the region fell by approximately 30% and a strong recovery is predicted for 2013. The Chinese construction machinery market is expected to be worth $61bn by 2015.
Jonnie Keys is general manager of Euro Auctions