The prices of used construction equipment continue to fall, and bidding prices at major auctions are 10% lower than in the same period last year. This is due to a decrease in demand from Southeast Asia due to the COVID-19.
Demand in Japan is steady due to the torrential rains in Kyushu and other factors, but the price decline in overseas markets has lowered the overall market.
Demand in the Philippines and Thailand also declined. In Southeast Asia, demand for cranes and other infrastructure-related equipment has been high for the past few years, but there have been several construction delays and stoppages caused by COVID-19. The average unit price at the crane truck auction was about 6 million yen, a 20% drop from January to March before COVID-19.
Source: The Nikkei (The original article was partially revised by the author.)
PSR Analysis: Much of the demand for construction equipment in Southeast Asia is met by used construction equipment, mainly from Japan. It is not uncommon for the destination for Japanese construction equipment to be Southeast Asia.
Buyers who in the past would come directly from Southeast Asia to Japan to buy used construction equipment can now bid on them without having to travel to Japan, thanks to the popularization of online auctions, with photos and reliable product descriptions.
Public investment and infrastructure development in the Philippines and Indonesia and Thailand, respectively, have supported demand, but COVID-19 has dampened those demands. The question is when those demands will return, but with trade itself shrinking, it will be hard to find the ingredients for a recovery, at least within 2020. PSR
Akihiro Komuro, is Research Analyst, Far East and Southeast Asia, for Power Systems Research
