The second quarter of 2021 (Q2 2021) showed continued positivity within the heavy-duty on- and off-highway mobile tools markets. Customer demand remained strong all through a lot of the quarter because the world continues to get back right into a extra normal tempo of life and infrastructure investments, in addition to good commodity prices help the development and agricultural tools markets.
Freight growth continued to drive truck demand in the us in particular with fleets seeking to get no matter new vehicles they might. Commercial car demand is predicted to stay high in all regions of the world into 2022, aside from China, stories Power Systems Research in its Q2 Truck Production Index.
Supply chain constraints are nonetheless a difficulty for a lot of producers, and are expected to proceed nicely into 2022 for some elements and supplies, similar to semiconductors.Raw materials costs continue to rise, placing value constraints on manufacturers and their clients.©Maksym Yemelyanov – stock.adobe.com
In general, international financial exercise was positive within the second quarter and is anticipated to stay so, which is able to profit the heavy automobile and gear markets. Data and analytics firm GlobalData recently revised its international economic development forecast for 2021; it is now forecasting the global GDP growth rate to be in the vary of 6.14%, up from the 4.87% it initially predicted in February.
Growth of 6.26% is predicted in emerging and growing international locations, due partially to increased economic investments in China and India. However, in different developing areas growth might be hindered by vaccination delays and removing fiscal support from the economy too early. GlobalData says superior economies are expected to see 5.15% development in 2021 as demand from domestic and export markets continues to grow.
Europe is forecast to guide financial recovery among the advanced economies. The UK will develop 6.77%, France 5.84% and Germany three.46%. GlobalData projects the U.S. will develop 6.4%, its fastest rate in 20 years. Japan has been revised to a downward fee because of lockdowns caused by increased COVID-19 an infection charges in the country which is hindering business.
And while India is also dealing with an outbreak, its development price remains to be anticipated to achieve 9.4%. China follows closely behind it at 8.61%. Turkey, Philippines, Indonesia and Malaysia are all forecast to develop over 5% in 2021.
Despite these predictions for economic development, GlobalData does notice rising inequality, crippled well being sectors and rising inflation charges paired with excessive debt ranges may pose challenges to world restoration.
Off-highway gear demand grows
The second quarter proved to be positive as soon as again for a lot of producers within the off-highway equipment industries. Volvo Group reviews a net sales enhance of 43% through the quarter (adjusted for forex and the divestment of UD Trucks). The firm says in its press release announcing its Q2 outcomes that it continued to experience good demand for its services and products. It also notes shortages of semiconductors and different production supplies did pose challenges and manufacturing stoppages; however despite these, the corporate experienced a healthy quarter.
Its Volvo Construction Equipment (Volvo CE) model additionally experienced a optimistic quarter. Net gross sales elevated 13% as a outcome of larger volumes in Europe, North America and South America. The firm says improved construction exercise, high buyer confidence and elevated funding for infrastructure initiatives helped order intake rise 35% through the quarter.
Asia, including China—the world’s largest building gear market—remained the highest market driver for the corporate despite a 12% drop in the area because of declining infrastructure investments. However, Asia excluding China was strong with improvements in all key markets, the corporate reports.
Volvo CE says demand for large and medium sized machines remained excessive and outpaced demand for compact machines.
High customer activity through May across trade segments benefited Q2 outcomes, says Volvo CE. In Europe, a 30% increase in unit volumes was achieved as most nations continued to get well economically. North America saw growth of 35% due to a excessive stage of infrastructure and housing construction activity, the corporate says. And South America offered the biggest improve at 71% as demand for commodities rose.
Volvo CE sales rose 13% in the course of the second quarter of 2021.Volvo Construction Equipment
Construction activity around the world is predicted to proceed driving demand for construction and mining equipment. According to a recent report from GlobalData, construction exercise in Western Europe is predicted to grow 5.7% in 2021. Many regional governments have supplied monetary assist to help economic restoration efforts which is predicted to help drive spending in building sectors corresponding to residential and infrastructure.
The most up-to-date CECE Business Barometer exhibits the present boom in the European construction equipment industry is maintaining the affiliation’s enterprise local weather index at a high stage, indicating producers’ confidence available in the market. There remains strong demand for gear, but supply chain constraints are inflicting challenges for producers. Many say they are trying to enhance capacities; 50% of surveyed corporations they plan to expand their workforce. The Committee for European Construction Equipment (CECE) says there’s presently no market where manufacturers predict declines.
While negotiations for an infrastructure invoice are ongoing in the united states, the prospects for the passage of 1 have supplied some market confidence and there has nonetheless been heightened activity in this area since late 2020 despite the lack of a giant, nationwide invoice.
Mark Killion, CFA, Director of U.S. Industry Services at Oxford Economics, stated during a quarterly financial webinar hosted by the Association of Equipment Manufacturers (AEM) in April that if an infrastructure spending bill had been to be passed it would have a robust influence on the construction sector. Construction sector progress would doubtless double over Oxford Economics’ baseline forecast and supply growth over the lengthy term. He said GDP can be anticipated to grow 4.3% in 2022 and 2.0% in 2023, with the level of GDP up 1.7% by the tip of 2023.
Housing has been the most important space of progress for the construction sector. Residential building in particular stays strong and is anticipated to be into subsequent 12 months as properly. Though it’s going to range state by state, generally Killion said residential construction spending will proceed to outpace non-residential building.
He mentioned general building equipment is anticipated to profit from robust demand with progress anticipated via 2024 in the united states
Infrastructure spending around the world helps drive demand for development tools.©Image’in – stock.adobe.com
Agricultural gear market
Demand has additionally been robust in the agricultural tools marketplace for much of 2021. AEM just lately reported U.S. tractor gross sales declined in June which was only the second negative end in a yr. Tractors below forty hp (29.8 kW) fell 18.4%, leading the overall decline in gross sales for the month. The mid-size phase, hp (30.6-74.6 kW), additionally dropped slightly, however all other segments in addition to combine gross sales have been up in the course of the month.
Available inventories are what AEM says might have lead to the decline in sales in June. U.S. farm tractor inventory is 41/3% beneath the same month in 2020. The association says that normally, sales for larger tools stay strong which signifies optimistic farmer sentiment. Good commodity markets continue to learn the trade, and are expected to for the foreseeable future.
Chloe Parkins, Senior Economist at Oxford Economics, said throughout AEM’s April economic webinar that farm income has elevated rapidly which has enabled farmers to spend money on new machinery. Demand for food will proceed to be robust, and is expected to increase as restaurants in the us and around the world start returning to extra normal service. Double-digit growth is anticipated in 2021, she mentioned during the webinar.
However, like many industries, the costs of uncooked supplies could pose a difficulty each for the farmers and the tools producers.
The European Agricultural Machinery affiliation CEMA has reported the rising value of fabric costs is impacting the agricultural gear equipment trade. Prices for a lot of supplies have significantly elevated, leading to larger production costs for producers which in plenty of cases are being reflected in larger customer prices, as properly.
Steel costs, for example, have more than doubled in 1 year, going from 550 euros per ton to 1,250 euros per ton says CEMA. This material can characterize as a lot as 30-40% of the average manufacturing costs for producers, depending on the sort of tools. Prices for different metals have additionally risen, as properly as that of products derived from petroleum, corresponding to ST plastic whose value CEMA says has increased 70% in 6 months.
MaterialsSept. 2020 Base Price ValueJune 2021 Price Value9-Month TrendFoundry Products100192+90%Aluminum$2022/ton$2478/ton+22%Copper$6035/ton$9852/ton+63%Platinum$870/ounce$1187/ounce+36%Natural Rubber$1.43/kg$2.4/kg+67%Crude Oil WTI$70/bbl$70/bbln/aThe above chart from CEMA is sourced from Statista.com (The costs indicated above are those of their quotation on the stock exchanges. Depending on a company’s supply contracts, it may quickly pay a different value.)
CEMA says it is hopeful lifting of trade restrictions on steel and aluminum imports into the European Union will assist to limit further value will increase.
Added to the higher materials prices is the worldwide shortage of semiconductors and different electronic elements as a end result of their widespread use in several other applications and producers being unable to keep up with current demand. Freight costs are additionally posing challenges for manufacturers, CEMA notes.
CEMA’s Business Barometer launched in June reveals that gear demand is strong, however these materials and supply constraints are weighing on producers. Respondents to its business barometer survey reveals weakened expectations for additional order consumption progress for the first time in 2021 because of these challenges. Despite this, the affiliation says most corporations’ full-year 2021 forecasts stay positive throughout all agricultural equipment segments. A majority of survey individuals still anticipate increases in turnover for the rest of the 12 months.Sales for agricultural equipment in Italy rose during the first half of the year.FederUnacoma
The Italian agricultural gear association FederUnacoma has released its newest figures which present a 52% increase in tractor registrations in Italy during the first 6 months of 2021. Other agricultural gear also noticed growth through the first half of the 12 months. Strong sales increases to customers in North America, India and Turkey aided the Italian agricultural equipment market.
Over 12,500 tractors have been bought so far, whereas mix harvester sales rose 64% with a total of 229 models offered. Telehandlers confirmed an 85% improve with 775 machines sold, reviews FederUnacoma. Market restoration after the COVID-19 lockdowns in Italy, as nicely as tax incentives from the federal government and a push toward the use of more superior gear helped drive market growth.
International markets additionally strong demand between January and May:
* United States – 26%
* Canada – 51%
* Turkey – 81%
* India – 67%
* Germany – 15%
* Spain – 42%
* UK – 21%
* France – 26% (for first 5 months of 2021)
FederUnacoma says this world development pattern is predicted to continue in the second half of the year, and into the approaching years. It forecasts commerce for the sector will improve 7.3% between 2021 and 2024.
Listen to our podcast interview with CLAAS’ Eric Raby to get an OEM’s perspective on the ag machinery outlook for 2021.