Column: China’s commodity import trend driven by prices, not economy
China's imports of major commodities are often viewed through the prism of the performance of, and outlook for, the world's second-biggest economy.
Despite last year’s sharp sales drops, the worldwide mining equipment market is looking up as analysts predict a continuous growth beginning now through 2017, spurred by voracious demand for mined materials coming from China, India, and other developing nations.
The latest report from research company Freedonia Group says global mining suppliers and equipment manufacturers should see the market expanding more than 8% per year through 2017 to $135 billion.
The analysts say companies around the globe are anticipating an increase in metals production, driven by new projects, expansions, and the reopening of suspended projects.
Ken Stapylton, vice president of surface drilling at Sandvik Swedish equipment and tool manufacturer Sandvik Mining (STO:SAND), says he expects coal and iron ore to remain strong this year, as rising global energy demand will spur growth in related equipment.
If you can’t beat them…
Asked about Rio Tinto’s CEO Sam Walsh recent comments on China-made equipment, which he described as “high quality,” Stapylton said the current order is changing.
“Chinese manufacturers are moving into the premium product market, adding potential competition for existing manufacturers,” he says, adding that Sandvik has been developing its engineering, design and assembly capacity in China since 1997.
Last year, the company released its 1175E, the first Sandvik surface drill engineered, sourced and manufactured in China for the local market.
The other big shift he sees is the move towards automation. “With deeper and more remote mines, an inherent next step is to remove as much human intervention in the mineral extraction process as possible (…) We continue to see our customers’ needs moving in that direction,” he noted.
Stapylton also said an increasing number of companies are beginning to see value in green products and features that allow them to reduce their environmental impact. For him, this is a niche worth exploring.
The miner equipment veteran’s view matches recently published studies that predict a spike in demand for renewable energy systems in the mining industry.
Image by Dima Fadeev/Shutterstock.com
