Construction machinery stocks moved higher in the afternoon trading session. At the time of writing, shares of SANY HEAVY IND (HKEX: 06031) were up 9.74% to HK$20.06. MORIMATSU INTL (HKEX: 02155) rose 4.27% to HK$7.57. LONKING (HKEX: 03339) gained 2.81% to HK$2.93, while ZOOMLION (HKEX: 01157) edged up 0.73% to HK$6.86.

Key Market Drivers

According to statistics from the China Construction Machinery Association, sales of various excavators in June totaled 25,445 units, representing a year-on-year increase of 35.3%. Domestic sales accounted for 10,898 units, up 33.9% year-on-year, while exports reached 14,547 units, growing 36.4% compared to the same period last year.

Furthermore, since May 1st, companies including Sany, XCMG, Liugong, and Shantui have announced price increases for excavators of approximately 5%. Sany and XCMG have also raised prices for their crane products.

Analyst Commentary

Analysts from CITIC Securities point out that excavator sales in June, both domestically and for export, continued to surpass expectations. Domestic sales this year have shown a noticeable shift of the peak season to a later period, attributed to the later Chinese New Year compared to last year. The domestic excavator market has maintained strong year-on-year growth since March, with expectations for this growth trend to continue. Exports have remained robust, seemingly unaffected by international geopolitical tensions, tariff changes, or interest rate adjustments, indicating that the high-growth momentum for China's construction machinery sector is being sustained.

The price increases initiated by leading domestic manufacturers signal a moderation in the industry-wide price war that began earlier this year, pointing towards a shift to more stable and healthy competitive dynamics.