Chinese excavator manufacturers plan to expand or strand

Currently, Komatsu and Hitachi Construction Machinery have resumed operations after Japan’s production activities were temporarily interrupted. We believe this has a relatively small direct impact on its Chinese operations. The major suppliers of hydraulic equipment for Chinese construction machinery manufacturers (Kawasaki Heavy Industries, KYB, and Nabtesco) all have factories in western Japan, so production has suffered limited direct interference. In addition, China's excavator manufacturers usually hold 2-3 months of inventory, so we expect that their production activities will not be affected by earthquakes in the short term.

However, the bottleneck in the supply of hydraulic equipment will intensify because: 1) The supply of hydraulic equipment from Kawasaki Heavy Industries, KYB and Nabtesco is already tight, but the three companies plan to increase their Chinese production capacity by 20% in fiscal 2011, and Kawasaki Heavy Industries and KYB The new capacity may not be fully operational until mid-2011. 2) Although the direct impact on the production of hydraulic equipment in Japan is small, we expect that the shortage of parts and logistics and other issues will bring about a certain degree of indirect impact. KYB said it is facing a shortage of oil seals. In addition, we have heard that the current Isuzu company's engine procurement has also become tense. 3) Japanese hydraulic equipment suppliers will give priority to the procurement needs of Japanese construction machinery companies. 4) Although Chinese companies are striving to diversify their supply channels, we believe that the potential supply capacity of other hydraulic equipment suppliers is also relatively tight. (It is reported that China's construction machinery companies have already approached South Korean hydraulic device manufacturers, such as Tong Myong, but industry sources show that Tong Myong's production capacity is also quite tense.) At the same time, although Sany Heavy Industry, Zoomlion and Liugong are It pays great attention to the development of its own high-pressure hydraulic equipment, but in terms of current research and development capabilities, it takes 2 to 5 years for Chinese companies to develop their own hydraulic devices.

Some industry experts believe that the Japanese earthquake will increase the bottleneck problem of Japan's supply of hydraulic equipment to China, and the bottleneck of the supply of hydraulic equipment may affect the large-scale capacity expansion plan of Chinese excavator manufacturers.