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Raw materials account for 90%+ of excavator manufacturing costs. Steel alone makes up 13%–15% of direct costs, and when including components, total steel exposure exceeds 30%.
Since early 2026, steel and raw material price increases have raised manufacturing costs by +5% sequentially.
2026 Q1 industry net profit fell -4.8% YoY; net margin declined to 8.2% (‑1.6 ppts YoY), reflecting clear cost pressure.
In May–June, China’s top three players (Sany, Liugong, XCMG) raised prices by 3%–5% – the first large‑scale joint increase in three years.
Global brands like Caterpillar and Komatsu followed with hikes of 3%–8%, showing consistent global cost transmission.
The industry is shifting from price‑war competition to value‑based competition, reducing irrational undercutting.
Leading manufacturers, with strong pricing power, can pass through costs and even stabilise or improve gross margins.
Smaller players struggle to absorb costs or raise prices, facing severe margin pressure, production cuts, or exit.
Trend: Market share increasingly concentrates toward Sany, XCMG, and Liugong.
OEMs: First pursue internal cost reduction (supply chain optimisation, efficiency gains), then pass on remaining pressure via price increases.
Dealers: Trapped between “hard to raise prices” and “inventory devaluation”; short‑term margins shrink, some forced to discount for volume.
End users: Purchase cost rises by ~5%, dampening new machine purchases in the short term, while second‑hand equipment and rental demand increase.
Higher prices push companies to promote high‑value models (large excavators, electric excavators) to offset cost pressure.
Electrification, lightweighting, and smart technologies accelerate – reducing steel consumption, improving energy efficiency, and lowering long‑term costs.
Export markets have independent pricing mechanisms, allowing smoother cost pass‑through and better profit margins than domestic sales.
April 2026 excavator exports: 11,825 units, +23.2% YoY, becoming a core growth driver.
Rising steel prices act as a watershed for the excavator industry:
Short term – costs rise and profits compress.
Medium term – price hikes restore profitability and improve competition dynamics.
Long term – accelerated industry consolidation, technology upgrades, and rising concentration among top players.
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