Korean Construction Machinery Booms Amid Surging US and China Demand... Concerns Over Parts Shortage

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As various infrastructure investments continue to overcome the economic impact of COVID-19 centered on China and the United States, Korean construction machinery companies have experienced a boom. While they seem busy smiling broadly due to the explosive demand pouring in, concerns about parts shortages are growing, and they are actively preparing for this.

According to the industry on the 26th, last month, the total export value of Korean excavators reached $290 million (approximately 323.2 billion KRW), a 19.4% increase compared to the same period last year, marking the highest monthly level since May 2018. The resumption of large-scale construction projects, which had been halted due to the COVID-19 impact last year, led to a surge in demand for construction equipment. The industry had expected the resumption of these projects to be delayed due to lingering COVID-19 effects in the first quarter of this year, but major governments actively intervened to stimulate the economy, advancing the resumption timeline earlier than anticipated.

In particular, the rapid pace of China's economic recovery is leading to a boom in the Korean construction machinery industry. Doosan Infracore sold 4,591 excavators in China last month alone, setting the highest monthly sales record since entering the Chinese market in 1994. Hyundai Construction Equipment, a heavy equipment manufacturer affiliated with Hyundai Heavy Industries Group, also actively continues its business, securing an order for 2,200 construction machines last month, the largest scale since entering the Chinese market. As demand for construction in transportation infrastructure, real estate, and mining increases, domestic companies are expected to directly benefit this year.

The United States has also been rolling out various infrastructure investments since the inauguration of the Joe Biden administration. With heavy support for key industries such as semiconductors and batteries, demand for factory construction is increasing. Accordingly, demand in the North American region is also expected to rise. As raw material prices increase, cases of developing mines are also increasing, leading to a rise in construction machinery sales.

However, concerns about parts shortages that began with COVID-19 have also hit the construction machinery industry. Construction machinery can only be produced when all parts, including semiconductors, are procured, but recently the possibility of parts shortages has increased, prompting companies to focus on preparing countermeasures to procure parts in advance. An industry official said, "Although factories have not stopped operating yet, there is a judgment that supply and demand will not be smooth, so the responsible departments have been very busy meeting with partners these days."

This content was produced with the assistance of AI translation services.