Release time:

2021-05-24

【Summary】In 2020, China took the lead in effectively controlling the epidemic, and since the second half of the year, the economy has rapidly recovered, with a year-on-year GDP growth of 2.3%. On this basis, in 2021, China's economy continued to grow strongly, with a year-on-year GDP growth of 18.3% in the first quarter, an increase of 10.3% compared to the first quarter of 2019. The growth of the domestic economy has driven the recovery and growth of the machine tool market demand. From January to March 2021, the machine tool industry continued the recovery growth trend that began in the second half of 2020. Compared with the same period last year and the same period in 2019, all major economic indicators achieved significant growth, and quality and efficiency improved significantly. Looking at the whole year, the machine tool industry is likely to reverse the downward trend of nearly a decade and achieve growth of over 5%. 1. Basic situation of industry operation According to the statistical data of key enterprises from the China Machine Tool & Tool Industry Association, enterprise research situations, and relevant materials provided by sub-associations, the operational situation of the machine tool industry in the first quarter of 2021 is summarized as follows. (1) Operating income continues to rise sharply, with widespread growth across sub-industries From January to March 2021, the operating income of key enterprises increased by 73.1% year-on-year. By sub-industry, the year-on-year growth rate of CNC devices and rolling functional components exceeded 100%; the year-on-year growth rate of metal cutting machine tools, machine tool accessories, and abrasives was over 70%; the year-on-year growth rate of metal forming machine tools and machine tool electrical appliances was around 50%; the year-on-year growth rate of measuring tools was close to 40%. Compared with the same period in 2019, the increase in operating income of key enterprises exceeded 30%, but the situation varied by sub-industry: metal forming machine tools saw a decline of nearly 20%, measuring tools remained basically flat, while other sub-industries experienced varying degrees of growth. (2) Total profit significantly increased, with all sub-industries profitable From January to March 2021, the total profit of key enterprises was 660 million yuan, while the same period last year and in 2019 were both in a state of loss. By sub-industry, all sub-industries achieved profitability. Specifically, metal cutting machine tools, rolling functional components, abrasives, and CNC devices turned from losses in the same period last year to profits; metal forming machine tools, machine tool electrical appliances, machine tool accessories, and measuring tools were profitable in the same period last year, and this year’s first quarter saw a significant year-on-year increase in total profits. (3) The proportion of loss-making enterprises narrowed year-on-year but was greater than in 2019 In March 2021, the proportion of loss-making enterprises among key enterprises was 28.6%, narrowing by 12.0 percentage points compared to the same month last year. Compared with the same month in 2019, the proportion of loss-making enterprises among key enterprises increased by 2.1 percentage points. (4) Orders continued to grow rapidly, with growth exceeding expectations From January to March 2021, new orders for metal processing machine tools increased by 90.1% year-on-year; orders on hand increased by 28.1% year-on-year. Among them, new orders for metal cutting machine tools increased by 111.5% year-on-year, and orders on hand increased by 25.6% year-on-year; new orders for metal forming machine tools increased by 53.7% year-on-year, and orders on hand increased by 34.6% year-on-year. Compared with the same period in 2019, new orders for metal processing machine tools increased by 62.7%, with new orders for metal cutting machine tools increasing by 74.6% and new orders for metal forming machine tools increasing by 31.7%. The growth trend of orders on hand is similar. (5) Machine tool production increased, and finished product inventory slightly decreased From January to March 2021, the production of metal processing machine tools increased by 71.8% year-on-year, and the output value increased by 70.8% year-on-year. Among them, the production of metal cutting machine tools increased by 71.6% year-on-year, and the output value increased by 76.3% year-on-year; the production of metal forming machine tools increased by 72.8% year-on-year, and the output value increased by 59.4% year-on-year. Compared with the same period in 2019, the production and output value of metal cutting machine tools increased by about 10%, while the production and output value of metal forming machine tools increased by about 5%. From January to March 2021, the inventory of key enterprises increased by 3.1% year-on-year. Among them, raw material inventory increased by 7.5% year-on-year, while finished product inventory decreased by 3.5% year-on-year. The finished product inventory of metal processing machine tools increased by 0.7% year-on-year. Among them, metal cutting machine tools increased by 0.2% year-on-year, and metal forming machine tools increased by 17.4% year-on-year. 2. Import and export situation According to data from Chinese customs, the overall import and export of machine tools and tools showed a significant growth trend in the first quarter of 2021, with a total import and export value increasing by 30.5% year-on-year, and an increase of 9.5% compared to the first quarter of 2019. In the first quarter of 2021, the import and export of machine tools and tools maintained a surplus since June 2019. The import of machine tool products was 3.28 billion USD, and the export was 4.03 billion USD, resulting in a surplus of 750 million USD. On the import side, the overall import showed a recovery growth trend in the first quarter of 2021. The import value increased by 22.9% year-on-year, but decreased by 3.3% compared to the first quarter of 2019. Among them, the import value of metal processing machine tools was 1.68 billion USD, an increase of 28.9% year-on-year. Specifically, the import value of metal cutting machine tools was 1.37 billion USD, an increase of 27.7% year-on-year; the import value of metal forming machine tools was 310 million USD, an increase of 34.2% year-on-year. In the first quarter, the import value of cutting tools was 430 million USD, an increase of 29.6% year-on-year; the import value of abrasives was 180 million USD, an increase of 30.8% year-on-year; the import value of machine tool functional components had the largest increase, reaching 470 million USD, an increase of 63.7% year-on-year. In terms of import sources, from January to March 2021, the top three sources of imports were: Japan 1.09 billion USD, an increase of 50.9% year-on-year; Germany 670 million USD, an increase of 7.1% year-on-year; Taiwan, China 430 million USD, an increase of 68.5% year-on-year. On the export side, the overall trend showed significant growth in the first quarter of 2021. The export value increased by 37.3% year-on-year, and increased by 22.8% compared to the first quarter of 2019. Among them, the export value of metal processing machine tools was 1.12 billion USD, an increase of 40.8% year-on-year. Specifically, the export value of metal cutting machine tools was 770 million USD, an increase of 43.0% year-on-year; the export value of metal forming machine tools was 360 million USD, an increase of 36.4% year-on-year. In the first quarter, the export value of cutting tools was 830 million USD, an increase of 49.6% year-on-year; the export value of abrasives was 820 million USD, an increase of 56.5% year-on-year. In terms of export destinations, from January to March 2021, the top three export destinations were: the United States 510 million USD, an increase of 47.2% year-on-year; Vietnam 310 million USD, an increase of 57.1% year-on-year; India 300 million USD, an increase of 46.2% year-on-year. 3. Characteristics of industry operation (1) The overall operation of the industry has improved significantly From the statistical data of key enterprises from the association, the analysis materials provided by relevant sub-associations, and the research conducted by the association on some enterprises, it can be seen that in the first quarter of 2021, most enterprises in various sub-industries saw a significant year-on-year increase in major economic indicators, and there was also a certain degree of growth compared to the same period in 2019. Orders were full, overtime work was common, and production pressure was high. After nearly a decade of overall downward fluctuation in the industry, market demand is showing signs of recovery. Imports have achieved recovery growth, with import values only slightly reduced compared to the same period in 2019, while exports not only increased significantly year-on-year but also grew by more than 20% compared to the same period in 2019. The reasons for the increase in market demand are multifaceted, mainly due to the effectiveness of the economic stimulus and assistance policies implemented by the state to overcome the impact of the epidemic, the repeated outbreaks of the epidemic abroad leading to a surge of orders into China, the inability to guarantee import demand, the delayed release of demand during the epidemic, the recovery growth of the automotive manufacturing industry, significant growth in industries such as construction machinery and agricultural machinery, and the low base in the same period of 2020, etc. (2) The growth trend of metal cutting machine tools is stronger From the above data, it can be seen that from January to March 2021, the operating income, machine tool production, new orders, and orders on hand in the metal cutting machine tool sub-industry all saw significant year-on-year growth. Compared to the same period in 2019, there was also a certain degree of growth. In particular, orders on hand remained high, new orders continued to grow rapidly, and the growth rate far exceeded that of operating income, providing ample endogenous momentum for future development. The year-on-year growth rate of major economic indicators in the metal forming machine tool sub-industry is generally lower than that of metal cutting machine tools. Compared to the same period in 2019, new orders for metal forming machine tools increased by 31.7%, but many other indicators still lag behind the levels of the same period in 2019, indicating that the metal forming machine tool sub-industry is still in a recovery process. However, some key enterprises in certain industries have already shown a strong growth trend. (3) Innovation is increasingly becoming the main driving force for enterprise development The association's research found that under the generally increasing market demand, there are still significant differences in the operational situations of enterprises in the machine tool and tool industry. Enterprises that persistently engage in product research and development and structural adjustments during the industry's downturn, and closely follow changes in market demand, have performed better in terms of business performance. In recent years, against the backdrop of supply-side structural reforms and optimization of industrial structure in China, market demand has undergone profound changes. For example, the rapid development of emerging industries such as new energy vehicles, 5G, and semiconductors has raised many new requirements for machine tool products, and overall, the demand for products is gradually increasing. The development of the machine tool industry is showing new changes, shifting from discrete manufacturing technology to system integration and intelligent manufacturing technology, from mass production to customization, from demand fulfillment to demand creation, and from investment-oriented to investment and consumption-oriented. In response to changes in demand and competitive pressure, innovation has become an urgent need to drive the development of the industry and enterprises. 4. Prominent issues in industry operation and policy recommendations (1) Rising raw material prices severely affect enterprise operations Many enterprises report that the current prices of major raw materials such as steel, copper, and aluminum, as well as related supporting parts, continue to rise, leading to a significant increase in enterprise costs. The impact is particularly severe on sub-industries such as forging machinery, heavy machine tools, and machine tool accessories. It is recommended that relevant departments strengthen macro-control over raw material prices, suppress abnormal price increases, maintain normal business operations of enterprises, and promote the healthy development of the upstream and downstream of the industrial chain. (2) The shortage of talent in the machine tool and tool industry is prominent In recent years, as the machine tool industry has continued to decline, industry profit margins have continued to decrease, work is relatively hard, skill requirements are relatively high, and wage levels are difficult to increase significantly, leading to more and more young people unwilling to engage in the machine tool industry. Enterprises generally report that recruiting professional technical talents is fraught with difficulties, and high-end talents are even harder to find. Recruiting workers in casting, welding, machining, and assembly is also becoming increasingly difficult. It is recommended that the state increase training for professional technical talents, pay attention to the training of skilled workers, and cultivate professional skilled talents with a spirit of craftsmanship. At the same time, research and formulate policies to stabilize and cultivate professional and skilled talents. (3) Insufficient R&D investment needed to break through bottlenecks Due to the low profit margins of machine tool products, enterprises generally lack R&D investment. This is especially true in key areas such as high-end machine tools, CNC systems, precision sensors, and critical functional components, where there is a significant gap in technology compared to foreign countries, and the required research funding is substantial, which most enterprises cannot afford. The current evolution of various domestic and international situations has created favorable conditions for the localization of high-end machine tools and supporting functional components, CNC systems, etc., especially as user enterprises of machine tools have greatly increased their willingness to accept domestic products. It is recommended that the state increase support to help a number of enterprises with the conditions and foundation for breakthroughs to stand out, quickly solve bottleneck issues, and drive the transformation and upgrading of the industry. Overall, in the first quarter, the market demand for the machine tool and tool industry grew rapidly, and the industry operation improved steadily, achieving a good start for the year and laying a solid foundation for the annual operation. However, the issue of sharply rising raw material prices is quite prominent. The global epidemic prevention and control situation remains severe, and the external economic environment is still complex. Considering various factors and the relatively good development trend of the machine tool and tool industry at present, we expect that if there is no serious rebound of the epidemic, uncertain factors are effectively addressed, and various policies continue to show effectiveness, the machine tool and tool industry will continue the recovery growth trend of 2020 in 2021, with major economic indicators expected to grow by over 5%. Considering the impact of last year's base and other factors, the growth rate may show a gradually decreasing trend.

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