Hitachi Construction Machinery Co., Japan’s second-largest heavy-equipment maker, said Chinese demand for excavators will decline in the first half of next year as monetary tightening slows construction projects.

The sales downturn in China, the world’s biggest market for construction equipment, “will continue after the Lunar New Year” next month, Chief Executive Officer Michijiro Kikawa said in an interview at the company’s headquarters in Tokyo. “I had expected Chinese demand to come back sooner.”

Kikawa expects industry-wide sales of excavators in China to decrease by 30 percent in the year to March 31, compared with a forecast of a 20 percent decline two months ago. China will probably see no growth until June or July, Kikawa said.

Hitachi Construction Machinery gets as much as 40 percent of its annual sales in China in the first three months of the Lunar New Year, which starts on Jan. 23 next year. The company and competitors including Komatsu Ltd. are counting on coal and gas development projects in Indonesia and the U.S. and post- quake rebuilding in Japan for orders as Chinese demand slows.

Europe’s sovereign debt crisis also raises the threat of the turmoil spreading to Asia, Kikawa said. Europe’s woes “haven’t impacted demand for our machinery, though we’ll need to keep the risk in mind,” Kikawa said in the Dec. 22 interview.

China’s government has curbed lending and restricted home purchases to rein in inflation and asset bubbles. The government may next year start easing and increase spending on stimulus measures to boost the economy before the appointment of a new leadership, helping demand after mid-2012, Kikawa said.

Source:cmbol.com