TOKYO: China’s demand for diggers, loaders and other big-ticket machines used in construction will continue to fall this year as slower growth cools investment, according to the chief of Japan’s industry group.
The sale of excavators built by foreign suppliers is expected to drop about 40 percent in the fiscal year to March 2016, Jun Fujioka, chairman of the Japan Construction Equipment Manufacturers Association, said at a briefing in Tokyo Thursday.
“China’s central government keeps taking measures to prop up the economy, but we have yet to feel that the measures have been implemented by local governments,” Fujioka said. “It’s quite difficult to predict the Chinese market outlook.”
Komatsu Ltd. is Japan’s biggest supplier of construction equipment, competing with global No. 1 Caterpillar Inc. of the U.S. Fujioka is also the president of Kobe Steel Ltd.’s building machinery unit.
In July, Komatsu joined other big industrial suppliers in Japan to warn that earnings are suffering as China’s slowdown bites into sales. It said Chinese demand for building equipment collapsed by 50 percent in the first quarter.
In a survey of association members, 55 percent think 2016 will see further sales declines in China, Fujioka said. Just 14 percent reckon on an improvement. For this year, 73 percent of respondents say China’s market will deteriorate.
Chinese plants operated by Kobe Steel’s unit have been cutting output to pare excess inventories in response to weakening demand, Fujioka said.
The industry group gave a brighter forecast for overall Japanese sales of construction equipment, which will likely increase 2 percent to 2.16 trillion yen ($18 billion) in 2016, helped by exports to North America and elsewhere in Asia.
