Chinese Construction Equipment Market Oversupplied, Conference Reports

China’s market for construction equipment remains oversupplied with unsold inventory, according to analysts in a conference call organized by J.P. Morgan Securities JPM, the Wall Street Journal reports. An analyst told the WSJ after the conference that there is about a year’s supply of excavators available for sale in China. The analyst added that production is likely to be down 30 percent to 40 percent from 2012 while dealers work through existing inventories.

Caterpillar, Komatsu and other foreign manufacturers have had significant drops in sales in 2012. Manufacturers of engines and parts have also felt the sting.

David Phillips, managing director of Off-Highway Research, told the conference that global sales of construction equipment this year will total about $97.7 billion, and although sales in China will rise 6.6 percent to $25.9 billion, they will fall short of the 2011 peak of $37.1 billion.

Phillips said China last year had enough capacity to build 460,000 crawler excavators, more than four times the number sold in 2012, the WSJ said. Off-Highway said Sany Heavy Industry Co. had the largest share of the Chinese excavator market last year with 11 percent, followed by Komatsu at 8 percent, and then Hitachi Construction Machinery and Caterpillar.