2nd Quarter 2019:
Activity in the large mining equipment sector has clearly leveled off during the first half of 2019 after three years of recovery and expansion. In our opinion, it’s not clear yet whether this represents the beginning of a market contraction or simply a pause in a longer-run growth cycle. Mineral output levels and pricing are not moving in unison and are impacted by both general economic trends (e.g., the trade dispute between China and the U.S.) and events impacting individual sectors (e.g., the impact of the tragic tailings dam failure in Brazil). And with production/delivery lead times for many of the products covered in the Database, it’s difficult to determine how these factors impact shipments data calendar quarter to quarter.
Nevertheless, the data for Q2, along with similar results for Q1, point to an inflection point versus the positive trend that began in Q2 2016. This is reflected in Parker Bay’s Large Mining Equipment Index which declined by one percent (Q2/Q1) and now stands at 88.5 (2007 = 100). This index is value-weighted utilizing a constant-U.S. dollar price. And it masks significant shifts by product, mineral and geography.
Although the value of shipments declined by just one percent, units shipped dropped by nearly 8%. Deliveries of higher-value excavating/loading equipment increased appreciably: hydraulic shovels/excavators by 22%, wheel loaders by 17%. Offsetting these was 23% decline in crawler and wheel dozer deliveries which had increased by more than one-third between Q3 2018 and Q1 2019. Mining truck shipments, which account for the majority of machines shipped, declined by more than 5%; but only 1% on a value-weighted basis as strong growth in deliveries of ultra-class trucks helped balance declines across the smaller classes.