Northeast Securities has released a report indicating that 19,521 excavators were sold in July, marking a 13.9% year-on-year increase, with exports reaching 11,913 units, up 21.2%. Domestically, the implementation of equipment renewal policies, accelerated conversion of special bond funds, and the concentrated release of replacement demand have been steadily improving the domestic demand base. With both domestic and international demand thriving, the industry's positive momentum is expected to continue. The year 2026 remains a peak period for concentrated replacement of construction machinery. Additionally, overseas markets have become a core profit pillar, and there is still room for domestic leading companies to increase their global market share.

Key points from Northeast Securities include: from June to July, sales of core equipment maintained growth, driven by both domestic and international demand, sustaining the industry's positive outlook. According to data from the China Construction Machinery Association, July saw 19,521 excavators sold, up 13.9% year-on-year, with exports of 11,913 units, up 21.2%. Loader sales reached 11,774 units, a 30.8% increase, with export growth at 34.9%. June data was even more impressive, with excavator sales of 25,445 units, up 35.3% year-on-year, and domestic/export growth of 33.9% and 36.4%, respectively. Forklift sales totaled 160,742 units, up 16.8%, with an electrification rate of 80.2%. Although July saw a seasonal decline in the traditional off-peak period, year-on-year figures still showed double-digit growth, with export growth consistently outpacing domestic sales, reflecting strong overseas demand resilience. Domestically, the implementation of equipment renewal policies, accelerated conversion of special bond funds, and the concentrated release of replacement demand are steadily improving the domestic demand base, leading to a sustained positive industry outlook amid robust domestic and international demand.

Concentrated price hikes by leading companies are driving the industry from a "price competition for volume" to a "value competition" model, with a clear logic for profit improvement. In 2026, the industry will see its first large-scale collective price increase in nearly three years. Sany Heavy Industry raised excavator prices by 5% and crane prices by 2%-5%. XCMG increased excavator and crane prices by 3%-5% and 2%-5%, respectively. Liugong and Shantui raised excavator prices by 3%-5%, while concrete machinery and cranes also entered the price hike channel. Among international giants, Caterpillar added a 3%-5% surcharge in March and then raised prices by 4%-7% in July. Komatsu hiked excavator and loader prices by 7% and 8%, respectively, and will increase prices across its full range by another 5% in August. This round of price hikes is directly driven by rising costs of raw materials like steel and hydraulic components, but the deeper logic lies in improved bargaining power from recovering industry demand, higher capacity utilization, and enhanced pricing power of leading companies.

Multiple factors are converging to strengthen the upward cycle of the construction machinery sector. In terms of the replacement cycle, construction machinery has a lifespan of 8-10 years, with the last sales peak in 2016-2018. Based on historical cycles, 2026 remains a period of concentrated replacement, further supported by nearly 200 billion yuan in ultra-long-term special government bonds for equipment renewal, which is expected to release continued replacement demand. Regarding overseas expansion, overseas markets have become a core profit pillar, with typical host manufacturers seeing overseas revenue share exceed 50% in 2025. From January to June, excavator exports grew by 33.5% year-on-year, with strong demand along the Belt and Road routes in Southeast Asia, the Middle East, and Africa. Europe and the US are also benefiting from AI infrastructure-driven demand, leaving room for domestic leading companies to increase their global market share.

Related companies (not recommendations): Sany Heavy Industry (not covered), Zoomlion Heavy Industry (not covered), XCMG (not covered), Hengli Hydraulic, Liugong (not covered).

Risk warnings: macroeconomic development may fall short of expectations; intensified industry competition; geopolitical improvements may not materialize as expected.