China Excavator Demand to Stay Stagnant This Year, Kobe CEO Says

  • Kobe doesn't expect to see Chinese recovery until 2017
  • Japanese suppliers haven't boosted output for peak season

China’s demand for excavators will remain stagnant this year after sales almost halved in 2015 as its slowing economy cooled construction spending, according to Kobe Steel Ltd., owner of a major Japanese supplier.

“We shouldn’t assume demand for construction machinery will come back for another year, ” Chief Executive Officer Hiroya Kawasaki said Tuesday in an interview at a steel industry group meeting in Tokyo, adding a recovery isn’t likely until 2017. “We have to have a negative view on the market.”

China’s excavator market, excluding local suppliers, is set to contract to less than one seventh of the 2010 peak in the business year through March, according to an estimate by Tokyo-based Hitachi Construction Machinery Co. Construction equipment makers, including Komatsu Ltd. and Hitachi are seeking to withstand the prolonged sales slumps by shedding jobs and paring output.

Unlike previous years, Kobe’s construction machinery unit and its rivals haven’t boosted output for China’s peak demand season that follows the Lunar New Year holidays in February as they’re betting demand will be met from existing stocks, according to Kawasaki. Kobe derives 40 percent of sales from the steel division and 17 percent from the construction machinery unit.

— With assistance by Ichiro Suzuki

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