2020 has been a year of fear and uncertainty, and it hasn’t been the best for our economy. While we were waiting with bated breath for the situation to improve, each sector took some blows from the downtrodden economy, and the construction sector might be one of the most hard-hit sectors of all.
For one, the construction industry is largely dependent on other industries and businesses for survival. If the economy puts a hold on investment in new factories or industrial facilities, it passively affects the construction industry.
If there is little demand for fuels like coal or metals, the industry can hardly thrive. As the world was running on reserved fuel and limited energy consumption during the lockdown, the mining industry was compelled to halt its operation.
And all these adversely impacted the global construction and mining equipment market trend. However, despite the fallen market trend, the construction and mining equipment industry is estimated to reach USD 205 billion by the end of 2025. Wondering how? Read on to find out.
Impact of COVID-19 on The Mining Sector
The impact of COVID-19 in the mining sector has been turbulent. While some sectors took a nosedive, others kept soaring high. For instance, 2020 has been a good year for the precious metal sector, people were inclined to invest in Gold and the price went up by 19%. But the pandemic was rather disastrous for other industries, metallurgical coal and thermal coal have seen almost 21% - 23% price drop.
Besides, the volatile currency exchange rate between countries was another factor that kept everything in an uncertain condition for the mining sector. Almost all types of mining were affected by it- underground or soft rock mining and surface mining.
And the effect has not spared the mining equipment market, with low demand, the supply declined. From the Quick Guide to Soft Rock Mining, you can learn what equipment is used in mining and better understand how their supply affected the mining operation.
How COVID-19 Impacted the Market?
When the pandemic first hit China, it was compelled to shut down almost all its production. As you might know, a large part of the global production of construction equipment and material can be attributed to China. As the main source of supply for this equipment and material reduced, it impacted the global construction scenario. Large construction and mining projects were put to a halt because the supply was few and far between.
And right when China got back on its feet after the pandemic, the rest of the world was faced with the same pandemic ordeal as china. And it was no wonder construction and mining projects were put to a halt altogether in countries like Europe, India, UK. As the demand lowered, so was the supply of construction and mining equipment. This caused either delay or cancellation of various construction projects all over the world.
What Factors Drive The Global Construction And Mining Equipment Market?
The key strategy to regain balance in the construction and mining industry is to increase the development of infrastructures around the world. This will certainly increase the demand for construction materials and equipment, and the supply can get back on its feet again.
Countries like India, China, UK, and the USA are the main player in the construction industry, and the sooner they jumpstart their domestic and foreign construction projects, the sooner the industry will recover. Besides, all around the world, there is sudden demand in the construction of public infrastructures like hospitals, medical facilities, laboratories after the pandemic, and this will certainly contribute to its recovery.
What Is the Restraint In The Market?
One of the key restraints for the market to resume its pre-pandemic nature is the uncertainty of the future. Because investors are yet to determine how matters will go with the pandemic, they are less than enthusiastic about investment in the construction industry. The trickling investment can further prolong the recovery stage of the global construction equipment market.
What Opportunities Are There After the Pandemic?
While the production of construction and mining equipment might face some challenges due to decreased demand, the renting sector for equipment may thrive. Investors might not want to buy all the construction equipment they need for their projects, but they can still rent that equipment. And this will present a great opportunity for the rental market of construction equipment.
What Can Be the Challenge For the Manufactures?
With all the talk about the Green New Deal and the impact of CO2 emission, it will be challenging for construction equipment manufacturers to expand their business without turning to a sustainable solution. Besides, different countries have different standards regarding emission, fuel consumption, CO2 emission, gaseous compound, particle number, and other factors. And it creates a complication for the manufacturers to adhere to every standard while streamlining their production.
On top of it, new environmental laws are being enforced every day, and it is hard to adhere to the latest regulations. For years, they have been struggling to comply with different standards and this ultimately affects their production.
Who Are the Top Players In The Market?
The USA, Japan, UK, Sweden, and China are some key players in the construction and mining equipment production industry. Companies like Caterpillar inc(USA), Deere and Company (USA), Volvo Construction Equipments (Sweden), Komatsu Ltd. (Japan) are managing different strategies and developing new products for the industry to thrive.
Besides, the massive automation trend in the construction and mining industry is another concern for these companies. While in the mining industry 40% of expenditure is reserved only for operation and maintenance of various equipment, automation might be the best course of action. And that manufacturers should factor in this trend, so they can keep up with the market shift.
The Bottom Line
While the rebound of the global construction and mining equipment market is going to be a slow one, it will not be the same universally. Global construction scenarios largely vary depending on the region. For instance, Asia is the most populated region in the world, but it still lacks adequate infrastructure for development. While the construction of smaller projects like dams, airports, transport hubs, hydroelectric are on the rise here, ambitious yet controversial projects like China’s belt and road initiative might change the overall construction scenario in Asia. With regions like Asia providing a kick-start to the construction industry the construction equipment market recovery might not be so far.