China Galaxy Securities reported that in January 2026, domestic sales of excavators increased by 61.4% year-on-year, while exports grew by 40.5%. In December, various machinery types including truck cranes, crawler cranes, and mobile cranes also recorded strong growth in both domestic and overseas sales. The utilization rate of tower cranes from Pangyuan Rental in January reached the highest level for that month since 2022, and the Pangyuan Index showed a marginal increase in early February, indicating a continued recovery trend in both excavator and non-excavator segments domestically.
Overseas demand, particularly in Europe and North America, has shown signs of recovery. Leading international manufacturer Caterpillar (CAT.US) reported strong order backlogs, with North American construction machinery end-user demand expected to grow moderately in 2026. Mining machinery demand remains robust in Australia, Africa, and Latin America, while construction activity in Africa is also relatively active. Key insights from China Galaxy Securities are as follows:
**Strong Growth in Excavator Sales in January** According to industry association data, excavator sales reached 18,708 units in January, a 49.5% year-on-year increase. Domestic sales accounted for 8,723 units (including 24 electric excavators), up 61.4%, while exports totaled 9,985 units (including 11 electric excavators), up 40.5%. Domestic sales were influenced by the timing of the Lunar New Year holiday, while overseas recovery, rising metal prices, and strong mining demand in regions such as Australia, Africa, and Latin America contributed to export growth.
**Loader Sales and Electrification Trends** Loader sales increased by 42.8% domestically and 53.4% in exports during January. The electrification rate for loaders reached 25.43%, up 3 percentage points from the previous month.
**High Growth Across Other Machinery Types in December** Association data for December showed significant year-on-year growth across various machinery categories: - Truck cranes: total sales +38%, domestic +39%, exports +37% - Crawler cranes: total +68%, domestic +96%, exports +57% - Mobile cranes: total +35%, domestic +37%, exports +28% - Tower cranes: total -31%, domestic -46%, exports -9.8% - Forklifts: total +0.03%, domestic -5.2%, exports +8% - Aerial work platforms: total -8.4%, domestic -25%, exports +2%
Full-year 2025 sales growth figures were also provided for comparison across these categories.
**Operating Hours and Utilization Rates** In January, the average monthly operating hours for major construction machinery products reached 72.5 hours, a 23.9% year-on-year increase, though down 5.19% month-on-month. The monthly operating rate was 48.1%, down 2.63 percentage points year-on-year and 3.63 percentage points month-on-month.
According to Komatsu's data, excavator operating hours in December 2025 increased year-on-year in North America (+9.6%), Europe (+4.1%), and Indonesia (+3.4%), while Japan saw a decline (-4.9%).
**Caterpillar's Outlook and Order Backlog** Caterpillar reported a better-than-expected 11% year-on-year increase in end-user sales for Q4 2025. For 2026, end-user sales are projected to grow, supported by strong order backlogs, partly due to dealer restocking. North America is expected to see moderate growth with stable construction capital expenditure, while Latin America should maintain growth similar to 2025. Europe's economic conditions are improving, and construction activity remains strong in Africa and the Middle East. In the Asia-Pacific region, growth outside China is expected to be moderate, with the Chinese market rebounding from low levels.
In its resource segment, Caterpillar's Q4 2025 end-user sales declined 7% year-on-year, mainly due to weak coal prices. However, 2026 sales are forecast to grow, driven by increased demand for copper and gold, as well as activity in heavy construction and aggregates. Equipment replacement demand is also expected to be higher than in the previous year.
**Investment Recommendations** Given the synchronized growth in domestic and overseas sales, China Galaxy Securities recommends leading manufacturers including Sany Heavy Industry (600031.SH), XCMG Machinery (000425.SZ), Zoomlion (000157.SZ, 01157), and Liugong (000528.SZ), as well as core component supplier Hengli Hydraulic (601100.SH).
**Risk Factors** Potential risks include weaker-than-expected macroeconomic conditions, slower policy implementation, intensified industry competition, export trade disputes, and exchange rate fluctuations.
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