Surface Mining Equipment Index – Equipment orders continue to decline in Q1 2013

Things remain very tough if you are selling new or used mining equipment. It seems the smaller trucks and shovels fell off a cliff first and now the bigger stuff is following the trend. Even with record iron ore shipments out of Western Australia, there is not enough demand to soak up all of the idle equipment from the coal and gold mining sectors.

With cost cutters in charge at BHP, RIO and XSTRATA GLENCORE it is tough to see when demand will pick up. The following extract is reproduced from  Parker Bay Mining’s website:

1st Quarter 2013:

The first quarter of 2013 saw the fourth consecutive quarterly drop in mining equipment deliveries. However losses have slowed from the end of 2013 back to single-digits. But after a full year in decline, the market is off 25% from Q1 2012 and closer to a third in terms of the number of units.

In a somewhat positive sign for the market, Q1 2013 saw a slight uptick for some of the smaller size classes of equipment which had experience the sharpest declines to date. While not enough to offset the continued losses at the other end of the scale, this is the first indication that we may be reaching the bottom of the current down cycle. Deliveries of larger machines tend to lag a couple of quarters behind in the cycle.

Explanation of how the Index is Developed

The PBCo Mining Equipment Index is a measure of the quarterly evolution of surface mining equipment shipments worldwide.  It relies on data from Parker Bay’s Mobile Mining Equipment Database and encompasses the same product range covered by the Database*. The index utilizes the value of equipment as opposed to number of units such that one $10mm excavator has the same weight as five $2mm trucks. Values are not based on the price of each unit as sold but instead an approximate value assigned to machines by size class and product expressed in constant $’s (updated annually). As such, the index does not reflect changes in equipment pricing but rather the overall sales volume.

The base for the index is Q1 2007=100. Quarterly figures are not seasonally adjusted.

*All products are included except draglines whose low volume, high $ value, long lead time sales can cause fluctuations that don’t reflect the quarterly changes in the market. 

source: http://parkerbaymining.com/industry-information/surface-mining-equipment-index.htm – silas berry – asiaconsult.org

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