3rd Quarter 2018:
Total Q3 mining equipment unit shipments decreased by about 1% vs. Q2. But significant changes in the product mix toward larger, higher-value machines resulted in a four percent gain in the value of these shipments to more than US$1.8 billion. Changes from quarter to quarter often reflect short-term factors and may not persist going forward. Looking back over a longer period – Q3 2018 vs 2017 – the gains are far more substantial: +29% in units and +22% in value.
The first noteworthy difference in Q3 data is in the product mix: excavating and loading equipment, deliveries of which have lagged those of the trucks they are matched with during the recovery and expansion cycle, increase by 21% while trucks increased by just 7%. In sharp contrast, crawler and wheel dozers declined by 28% after nearly doubling across the previous three reporting periods. Hence the decrease in volume but increase in overall value.
Geographically, the very rapid growth in shipments to mines in Russia/CIS was sharply reversed in Q3 with total deliveries down 29% and falling below year-ago levels. Nevertheless, shipments to Russian miners remained second only to Indonesia among national markets. Indonesia continued the surprisingly strong gains in shipments propelled by continuing growth in coal markets and the contractors that support this mining sector. Australia also contributed to the Q3 growth in Australasia with the region accounting 40% of the global value of these products. Significant (though lesser) gains were recorded by North and Latin American mines. Among the smaller mining regions, Asia and Europe, Middle East markets gained while deliveries to African mines declined. Given the smaller size of these regions, quarter-to-quarter changes may not reflect longer-term trends.
Changes in the mineral distribution continued the trend away from coal, but coal mines collectively remained the largest buyers during Q3 with Indonesian and Russian mines accounting for over 70% of shipments to coal mining. Among the other major mineral markets, deliveries to copper and iron mines continued to increase and represented a combined 32% of the value of Q3 shipments vs. just 26% during Q2. These deliveries were dominated by Latin American copper mines whilst iron mining shipments were split more evenly among mines in Australia, Brazil and to a lesser degree North America and Russia/CIS. Shipments to oil sands increased while deliveries to gold mines declined. All these mineral market shares should be considered preliminary as a significant number of machines have not been identified by mineral (as yet).
Parker Bay considers this slowing of the current expansion cycle a ‘pause’ rather than foreshadowing a downturn. The gains recorded among larger miners reflect increasing capex both for sustaining existing production and some initial increases to that existing capacity.