The 2016 Australian Yellow Goods report from auditor Ernst and Young (EY) found that, predictably, minimal demand and high over-supply have sent yellow good values in the mining sector into a free-fall during the past 12 months.
However, the news is somewhat better for the construction/general purpose sector, which shows signs of recovery.
The research show auction clearance rates in excess of 70% and generally improving valuations for construction and general purpose equipment, compared to auction clearance rates around 60% and generally declining valuations for mining equipment.
In the construction/ general section of the market, the authors found:
In contrast, the mining industry exhibited the following:
Factors influencing this decline include continuing low prices for iron ore and coal, low-cost iron ore production undercutting high-cost iron ore producers’ profits, a reduced demand for rental and contract fleet services, and an oversupply of second hand equipment in the market.
The authors suggest factors which could be having a positive, or at least neutral, effect on the market include the emergency of US buyers looking to break up equipment for resale as spares, major infrastructure projects getting underway and a reduced supply of new equipment coming into the market which, while bad news for original equipment manufacturers, is likely to have a positive impact on the value of late-model second-hand equipment.
View the full report here.
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