The composite PMI for the machinery industry in April stood at 49.21, down 1.64 points on the month but up 4.14 points on the year. The seasonally-adjusted composite index stood at 49.98, an increase of 2.11 points MoM and 4.35 points YoY. The index for production was 50.53, up 0.3 point on a monthly basis and 8.37 points on a yearly basis, and that for new orders fell 5.59 points month-on-month but rose 2.83 points year-on-year to 46.93. Raw material inventories averaged 19.56 days of production in April, down 0.04 day from the previous month. The number of days of raw material inventories is for reference as the survey sample may have changed.
Summary: The machinery industry weakened in April, and the production of enterprises remained basically stable. But new orders have declined significantly amid weak downstream demand. Orders for general machinery such as fasteners and other components declined significantly, and the heavy machinery industry also entered the off-season earlier. Orders for electrical machinery products increased month-on-month, though. The fall in raw material prices failed to boost stockpiling.
Investigation results of machinery enterprises:
1. A medium-sized machinery company in east China: Orders in April continued to decrease by 20-30% compared to March, and were even worse than the same period last year. Despite the peak season, all industries performed poorly. Orders from new energy vehicles sector fell sharply. But fortunately, prices of steel scrap have dropped a lot recently, slightly lowering our cost.
2. A medium-sized machinery company in east China: The poor performance of new orders in April led to a decline in our purchase of steel plates. We plan to purchase a batch of galvanised steel sheets soon, which will depend on the prices. We hold a neutral view of the market in the second quarter, mainly because there are no new projects in the new workshop construction and workshop remodelling.
3. A medium-sized machinery company in east China: The production was stable in April, and there were not many new orders. We continued to produce for the previous orders and we believe that the overall production and sales situation this year will outperform last year, as we are currently producing new energy-related supporting facilities. In addition to exporting our own products, we also engage in exporting supporting equipment produced by other companies. The export orders should increase this year, mainly to Africa and the Middle East. However, domestic orders may decline year-on-year due to the high base in the same period last year and fierce domestic competition.
4. A large machinery company in north China: The new orders this month were poor, and the competition in the industry is very fierce now. The lack of a special advantage led to poor orders. There were no purchases in large volumes recently. High capital costs and poor orders kept us from restocking even when prices fell. We are not very optimistic about the market in the next three months.
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