I. Simultaneous Surge in Domestic and Overseas Excavator Sales in June, Driven by Equipment Replacement and Infrastructure Investment

In June 2026, total sales of various types of excavators in China reached 25,445 units, a significant year-on-year increase of 35.3%, signaling a continued upward trend in industry prosperity. As core equipment for infrastructure, real estate, and mining, fluctuations in excavator production and sales directly impact the supply, demand, and pricing of upstream and downstream bulk commodities.

A breakdown of the figures reveals domestic sales of 10,898 units (up 33.9% year-on-year) and overseas exports of 14,547 units (up 36.4% year-on-year); both markets saw growth exceeding 30%. New electric excavator models—65 units for the domestic market and 34 for overseas—were launched in volume, with lightweight, low-energy models gradually opening up new growth opportunities.

Excavators have a lifecycle of approximately eight years; following the previous sales peak between 2019 and 2022, 2026 marks the official entry into a cycle of concentrated equipment replacement. This factor, combined with the launch of major projects at the start of China's "15th Five-Year Plan" and expanding infrastructure and mining demand in emerging overseas markets, provides sustained support for annual construction machinery demand. Simultaneously, this drives procurement volumes for upstream bulk raw materials such as steel, non-ferrous metals, rubber, and energy. II. Key Upstream Raw Materials for the Excavator Industry Chain and SunSirs Benchmark Prices (as of July 8)

Raw materials account for over 50% of construction machinery manufacturing costs. Steel is the primary raw material, representing approximately 30% of the total production cost. Copper and aluminum are used in motors, electronic control systems, and hydraulic lines; natural rubber is used for tires and seals; and diesel is the core fuel for equipment operation. The SunSirs benchmark prices for these categories as of July 8 are as follows:

(I) Ferrous Metals

1. Rebar benchmark price: 3,132 RMB/ton; the market remained weak throughout the month, with an overall oversupply of steel suppressing price increases.

2. Hot-rolled coil benchmark price: 3,216 RMB/ton; the primary raw material for high-strength structural components in construction machinery.

3. Mild steel plate benchmark price: 3,358 RMB/ton; specialized plate material for excavator booms and sticks.

4. Cold-rolled sheet benchmark price: 3,765 RMB/ton; raw material for cabs and exterior housings.

(II) Non-ferrous Metals

1. Copper benchmark price: 72,150 RMB/ton; core raw material for electric excavator motors and cables.

2. Aluminum benchmark price: 18,630 RMB/ton; raw material for lightweight bodies and hydraulic valve components.

(III) Rubber and Plastic Raw Materials

Natural rubber benchmark price: 12,765 RMB/ton; essential raw material for excavator track pads and construction machinery tires.

III. Linkage Logic Between Upstream Bulk Raw Material Price Fluctuations and Excavator Production/Sales

1. Steel Industry Chain: Low steel prices support manufacturing margins, while increased excavator production volume conversely boosts demand for steel.

In the first half of the year, iron ore prices remained high, placing cost pressure on steel mills; however, due to persistently weak demand from the real estate sector, steel prices fluctuated at low levels overall. This provided a stable cost range for construction machinery manufacturing, keeping profit margins on the manufacturing side relatively manageable. In June, both domestic sales and exports of excavators surged, and orders for high-strength medium-thick plates and hot-rolled coils at domestic steel mills saw a significant month-on-month increase, providing a floor for downstream demand. However, given the overall overcapacity in the steel industry, this improvement in raw material transactions is merely cyclical and insufficient to drive a sustained upward trend in steel prices.

In the second half of the year, the concentrated deployment of infrastructure funds, high production schedules for construction machinery, and the continued release of essential steel demand—combined with increased plate procurement driven by the replacement cycle for aging equipment—will provide sustained, moderate support for rebar and medium-thick plate prices, limiting the scope for significant declines.

2. Non-ferrous metals (Copper & Aluminum): Electric excavators drive long-term growth, while short-term macro factors suppress prices.

Traditional demand for copper and aluminum stems from conventional internal combustion machinery and hydraulic components; however, the shift toward electric models significantly increases the consumption of these metals per unit. In June, sales volumes for electric excavators rose in both domestic and overseas markets, driving sustained long-term demand for non-ferrous metals. Nevertheless, high overseas inflation data in the first half of the year and expectations of interest rate hikes weighed on metal valuations, causing copper and aluminum prices to fluctuate with a generally weak bias.

As domestic infrastructure projects accelerate in the second half of the year—coupled with rising exports of new energy construction machinery—downstream consumption of copper and aluminum is gradually recovering. Tight supply at the mining level provides cost support, giving prices the potential for marginal recovery.

3. Natural Rubber: Demand for construction machinery tires remains stable; market trends reflect the overall off-season for rubber and plastics.

Rubber is primarily used in construction machinery tires and seals; while increased excavator production and sales generate stable demand, July falls within the traditional off-season for rubber consumption. With ample raw material supplies from overseas producing regions, natural rubber prices have remained range-bound. Should infrastructure projects see a rush to complete work in the fourth quarter, leading to increased restocking by downstream tire manufacturers, rubber prices could be driven to stage a temporary rebound. IV. Logic Supporting Domestic Demand: A Triple Boost from Policy Funds, Infrastructure Projects, and Equipment Replacement Drives the Construction Machinery Sector

1. Continued rollout of dedicated policy funds accelerates the realization of physical workloads

For 2026, RMB755 billion in central budget investment and RMB 800 billion in ultra-long special treasury bonds have been allocated for major projects, alongside the full disbursement of the third batch of "Two Major Projects" treasury bonds (RMB 193.5 billion). Concurrently, RMB 800 billion in new policy-oriented financial instruments has been deployed, supported by guarantees regarding land and environmental impact assessments. These measures drive the commencement of large-scale projects—such as the "Six Networks," water conservancy, railways, and highways—directly stimulating core demand for excavators.

Major projects—including the Yajiang Hydropower Station, the Xinjiang-Tibet Railway, the Yangtze River High-Speed ​​Railway, and 300,000 kilometers of rural roads—are launching in a concentrated manner. This sustains demand for earthwork and excavation, driving a steady recovery in domestic excavator sales.

2. Arrival of the replacement cycle for aging equipment creates stable domestic demand

The previous peak in equipment sales occurred between 2019 and 2022; 2026 marks the start of an eight-year concentrated scrapping cycle. Coupled with the implementation of subsidies for retiring old equipment, replacement demand is being released early. This offsets the weakness in traditional real estate demand and supports continued year-on-year growth in domestic sales.

3. Weak real estate demand acts as a minor drag, fully offset by infrastructure projects

While construction starts in the real estate sector remain sluggish—resulting in weaker demand for associated earthmoving and infrastructure machinery—incremental demand from new urbanization, livelihood-related infrastructure, energy storage facilities, and UHV (Ultra-High Voltage) projects fully compensates for the real estate shortfall. Overall domestic demand for excavators remains in an expansionary phase.

## V. Overseas Market Situation: Continued High Export Growth Drives Indirect Diversion of Domestic Bulk Raw Materials

1. Export figures remain strong, driven by stable overseas infrastructure demand

From January to April, the export value of domestic construction machinery reached US$21.835 billion, a year-on-year increase of 20.8%. In June, excavator exports rose by 36.4% year-on-year. Robust demand for mining and road construction in emerging overseas markets, combined with the increasing cost-performance advantage of domestic equipment, is driving a steady rise in global market penetration. The export of complete construction machinery units simultaneously drives the indirect export of upstream raw materials—such as steel, copper, aluminum, and rubber—thereby diverting domestic commodity supplies and alleviating pressure on domestic raw material inventories.

2. Interplay between overseas macroeconomics and raw materials affects export momentum

Monetary policy tightening in certain overseas economies and a temporary slowdown in the pace of infrastructure investment have dampened overseas procurement in the short term; however, the significant global infrastructure gap in the medium-to-long term ensures the sustainability of the construction machinery export boom, thereby indirectly stabilizing external demand for upstream commodities.

VI. Outlook for the entire industry chain (raw materials and construction machinery) in the second half of the year

Multiple positive factors are set to materialize in the second half of the year: funds from government bonds and special-purpose bonds continue to be deployed, and a large number of infrastructure projects will enter their peak construction phase between the third and fourth quarters; the cycle of concentrated equipment replacement persists; and overseas export orders remain high. Growth rates for both domestic sales and exports of excavators are expected to maintain a year-on-year increase of over 25%, pointing to a positive trend in industry prosperity for the year.

Overall, the high level of activity in excavator production and sales will continue to transmit demand to upstream bulk raw materials, providing stable support based on downstream essential needs. However, supply-demand dynamics vary across product categories—with steel remaining in ample supply throughout the year, non-ferrous mineral supplies remaining tight, and rubber subject to seasonal fluctuations. Consequently, commodity market trends will be characterized by divergent volatility; while construction machinery demand offers a periodic, marginal boost, it is unlikely to alter the medium-to-long-term supply-demand fundamentals of these specific commodities.

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