Euro Auctions - Used Construction Plant Global Review 2011 - 2012 - 1)

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?

With limited availability of brand new equipment and machinery in 2011 the trading market for pre owned construction equipment, mining machinery, access equipment, screening and crushing plant, diggers, dumpers and dozers and all things in-between became buoyant. Extremely buoyant – to the point that many makes and ranges of low hour’s equipment under two years old began selling above the price they were when they were new – Fact!

Following three years of sales drought, in 2011 the major plant manufacturers felt that confidence was returning to the market and had begun producing stock again, but not at the volumes previously seen prior to mid 2008. In early 2011 stock levels were still low and market demand manifested in a levelling of prices across Europe and the cost of brand new equipment was 20% up on prices in June 2009. Manufacturers were capitalising on market demand with substantial price hikes. The second hand market had always been strong, but these actions revived the market for good used equipment across the globe, regardless of make, model and year with prices strengthening for late-used and nearly-new equipment, with the strongest rallying in the 12 to 24 month class. But what was the global trading platform like for used plant and industrial equipment?

At Auction
The last two years have seen the trends at auction changing. The global interest in 12 to 24 month old plant is at an all time high. Dealers unable to purchase new machines from manufacturers are scouring the auctions either for stock, or machines to meet the requirements of current clients. What sells at auction is good low hour’s stock, with anything good attracting buyers, however the shift is now expanding to older machines. With 12 to 24 month old stocks depleting, buyers are now interested in stock from 24 to 48 months old. Once the route for disposal of ex-hire equipment, hire companies are replenishing stocks from auction and also hanging on to plant for much longer that previously was the norm.

Middle East
From a global view demand in the Middle East remains high with infrastructure construction projects planned across the region, and noticeably in Dubai, Saudi Arabia and Qatar. Because of the current lack of new machinery, and rising second hand prices, there seems to be a trend for Middle Eastern owners to hold on to redundant plant. With no need to sell, the stock is increasing in value and owners do not wish to drop prices. From plant auctions in the UK and Europe, the intelligence shows that plant is still being shipped to the Middle East, predominantly Dubai. Even in light of the construction slow down, access equipment and cranes (both mobile and static) are still finding their way into the region, destined for dealers in the Middle East and likely to be shipped on to end users in other countries, predominantly in the Pacific Rim region. The main interest currently from Middle Eastern buyers and contactors is for good late model, low hours Backhoes, predominantly CAT 432e’s and JCB telehandlers. CAT and Manitou are also in demand. Older model dump trucks from Volvo, that are getting a little long in the tooth, are highly sought after and CAT 740 dump trucks are always in demand.

North & Central AFrica
From mid June 2009 to late 2010, the North African market demand for plant, machinery and equipment was extremely buoyant. The increasing demand from countries in this region was reflected at auction with the trend for smaller excavators, dumpers and access equipment, soon trading up to larger machines and specialising in certain brands. Libya, Egypt, Morocco, Iraq, Lebanon and Oman were all really active. The improvement in these markets was marked and it was anticipated these countries would continue to show eventual interest in larger pieces of equipment. The 2011 unrest in the North Africa region due to the ‘Arab Spring’ saw demand for plant and machinery come to a grinding halt. However, with economies stabilising, confidence has returned to the region and buyers from Sudan, Egypt, Libya, Algeria and Morocco began trading again. West central Africa currently has a good appetite for logging and mining equipment. Predominantly Ghana and Nigeria are evident at auction and plant dealers are regular buyers. The larger European contractors are bringing equipment with them as part of the project infrastructure. Similarly, many of the project teams in the region from China are bringing less than reliable home brands, which is creating a market for more reliable USA and European makes of all equipment.

Pacific Rim
Two factors are affecting the Australian home market; the current exchange rate and the series of natural disasters that sadly hit that country. The exchange rate between the Australian Dollar and Pound Sterling is making transactions from the northern to the southern hemisphere very attractive. The cyclone and flooding in Queensland, Victoria and New South Wales in early 2011 was responsible for an increased demand for plant and machinery in Australia as the clean-up operation got underway – and is still ongoing.

With the economy in the Far East (predominantly China) booming, demand for raw materials was high, with Australia supplying that demand, with the result being a need for heavy excavating, earth moving and crushing machinery. Australia is mining everything from copper to coal, from ore to shale fuel. In 2011 efforts to get as much equipment down-under as is possible was a priority. This trend is likely to dramatically increase and extend well into 2012, with Australia always looking for late year, low hours heavy earth moving and mining equipment, with Volvo, Komatsu, CAT and JCB being the preferred makes.

The sad events in Japan in 2011 were expected to put manufacturing in that country into a decline for a considerable period of time and this is still evident in early 2012. A two year void is predicted for new machinery coming onto the world market and as a result the supply by manufacturers such as Takeuchi and Komatsu are expected to set a price rise with availability being reduced. The Japanese home market will put huge demands on stocks of equipment for the rebuilding programme, the ripples of which will be felt across the global economy. The price of second-hand Japanese equipment is also expected to continue to rise around the globe and will become evident at the next Euro Auctions sale. By contrast, Hong Kong is quiet, with demand in this region slowing down, although this may be a temporary measure.