Falling equipment market

FALLING coal demand may have an adverse impact on new mining equipment sales with a worst-case scenario of overall mining and construction equipment sales falling by 20% this year, according to the Construction & Mining Equipment Industry Group and Equipment Research Group International.
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Angie Tomlinson

The Australian construction and mining equipment market fell by 6.5% in 2008 following rises of 15.7% in 2007 and 8.7% in 2006.

Sales are expected to further decline during the first half of 2009, before stabilising as the world economy recovers, according to ERG.

CMEIG chief John Reid said a major factor influencing the market in 2009 was that equipment purchasers would find it harder to obtain finance for new equipment; however, he said mining equipment sales would be more solid as major mining companies still had access to finance.

“The fall in demand for the major export commodities, coal and iron ore, may have an adverse impact on demand for new mining equipment,” Reid said.

He added smaller contractors would be hardest hit and, consequently, sales of lower to mid-range machines were expected to fall.

“In overall terms market sales are expected to decline in the first half of 2009 and then stabilise as the world economy recovers,” he said.

“In the worst-case scenario we would expect the total market to fall by around 20 per cent to 2005 levels.”

Total sales for the construction and mining markets are forecast to fall by around 10-12% in 2009 compared with 2008, due to reduced activity in the construction market and a somewhat smaller decline in demand for mining equipment.

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