Friday, July 13, 2012

Euro Auctions - Used Construction Plant Global Review 2011 - 2012 - 2)

What a year 2011 was! Following the crash of the worlds construction markets, the movement of second hand plant and industrial equipment around the globe proved to be highly volatile and not without surprise. The fortunes of plant owners, plant buyers and plant sellers have changed over the last 12 months, but what is the real global story?

Eastern Europe
Large construction, roadway and infrastructure projects in Poland are on the increase so contractors, machine operators and hire companies are buying plant and machinery for that market. Poland has always maintained a good presence at auction and is interested in a complete cross section of plant and machinery with the emphasis being on earth moving equipment. Likewise, Finland has an interest in everything across the board. It also sells across the border to Russia which is back buying in its own right after an absence of some 24 months.

The Russian construction sector is experiencing healthy economic growth. The overall value of construction contracts signed in 2011 is expected to be higher than in 2010, and as a result demand for plant, machinery and equipment is just becoming visible.

While the residential housing sector remains subdued, civil engineering projects such as the 2012 APEC (Asia-Pacific Economic Co-operation) Summit in Vladivostok and the 2014 Winter Olympics in Sochi are contributing to sustained growth and the need for construction plant and equipment. Awarding the 2018 FIFA World Cup to Russia will create another need for stadiums and airports in all the host cities which will need to be either built or modernised. Russia is therefore set to boom and the demand will be strong.

In 2011 the USA was still manufacturing new machines but not at a rate at which to satisfy home market demands. This brought US buyers to Europe and favouring the Pound as opposed to the Euro. At the latter end of 2011 American buyers were more visible at auction after an absence of some 12 to 18 months and were looking for large heavy mining equipment for the home open-cast coal and iron ore extraction market, as well as for the oil sands of Alaska. A new emerging requirement is the extraction of shale gas from vast reserves in the US, which is predicted to break the US’s dependency on Middle East gas and oil. As a result big dozers and dump trucks for the contracting market are in demand, with older home market equipment going from the USA to South America.

South America
With the emergence of the success of the BRIC’s countries (Brazil, Russia, India, China) Latin America's largest economies, Brazil, Colombia and Peru are targeting a total of US$ 40 billion of private investment in infrastructure over the next two years. Brazil is planning to construct more than 5000 km of highways and at the end of 2011 had started the first of two projects to construct 1750 km of roadways. With Columbia embarking on four major initiatives worth an estimated US$ 30 billion, including highways, sea ports, airports, railways and river ways; and Peru embarking on projects in the hydrocarbons sector as well as rail and agricultural projects, South America is already showing signs of a demand for all manner of machinery and equipment. South America is seeking late model, low hours, and clean heavy earth moving equipment, with warranty, that is available immediately.

Predictions for 2012
Predicting the trend for 2012 is difficult, particularly when external, natural and even economic factors can change the landscape overnight, however there are a number of assumptions one can make.

UK Prices – the prices of good second-hand equipment in the UK will likely continue to hold for the foreseeable future, at least until manufacturing comes up to speed and takes the pressure off the interest in pre-owned equipment. In 2011 12 to 24 month old equipment was reaching premium prices, closely followed by good 24 to 48 month old stock. This trend is likely to increase. Several major UK construction projects are about to commence in the UK, including the first new bridge over the Thames for over 20 years, with others in the planning phase, and these will help ensure plant does not stand idol and sustain market demand.

Export – with the strengthening economies around the globe, machinery from the UK and Europe will continue to leave these shores for BRICs countries, Australia, South East Asia, South America and the USA.

Emerging Markets – Australia may well be the star of 2012, continuing to demands good quality late years equipment and machinery. South America will continue to develop as an emerging market, with demand expected to increase through 2012 as new infrastructure project increase tempo. With huge weight on its shoulders to deliver key projects on time and budget, demand from Russia will continue to grow in a sustained fashion.

One to watch - The ‘S’ in BRIC’s is no longer a signifier of the plural, as South Africa is accredited to now having that status as the ‘S’. This is seen as the next emerging economy and is one to watch.

Plant demand – European demand may be affected by strengthening sterling, leaving the UK more expensive than the rest of Europe. Australia has a huge demand for crushers, screeners, large dump trucks such as the Volvo a40e, CAT 740, Komatsu hm400 and large excavators in the 50 tonnes plus category. In North Africa it will be a case of waiting and seeing if peace holds, then wheel loaders, generators and batching plants should all be needed during the rebuild process. There will be continued demand from South America as the Brazilian market continues to grow, but importation is problematic and expensive


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