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[ANALYSIS] Heavy equipment outlook 2021: Light at the end of the tunnel?

Adjie Harisandi (The Jakarta Post)
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Jakarta
Tue, December 22, 2020

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[ANALYSIS] Heavy equipment outlook 2021: Light at the end of the tunnel? A field official monitors heavy equipment conducting open coal pit mining activity at PT Bukit Asam’s mining site. (Courtesy of/www.ptba.co.id)

T

he COVID-19 pandemic that has taken hold since early this year has depressed all economic sector performances, including the heavy equipment sector. The sales performance of heavy equipment in 2020 is expected to be the worst in the last seven years.

COVID-19 has depressed the heavy equipment sales in two ways. First, the pandemic itself, has depressed commodity prices, especially mining commodities, and reduced the mining sector's production activity and heavy equipment needs. The second way has been as a result of limited mobility due to large-scale social restrictions (PSBB).

It is estimated that cumulative heavy equipment sales from January to October 2020 only amounted to 4,483 units, down by 47.5 percent compared with the same period in 2019. In more detail, according to United Tractors data, heavy equipment sales have declined in all sectors. The most profound decline occurred in the mining sector, which dropped by 59.1 percent, while the other sectors also have experienced slides, such as agriculture, which dropped by 49.5 percent, construction by 45.1 percent, and forestry by 40.6 percent.

What is the projection for heavy equipment sales next year?

We predict that the sales performance of heavy equipment will be better than in 2020. Heavy equipment sales will potentially grow 5.9 percent to 6,123 units from the estimated heavy equipment full-year sales in 2020 of only 5,883 units.

Signs of improvement have been seen in the monthly sales performance from June to October. After touching the lowest monthly sales point in May at only 176 units, heavy equipment sales gradually increased to 641 units in October.

Furthermore, some fundamental data also lead to positive expectations for heavy equipment sales next year.

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