Downstream nickel PMI dips from Oct to 40.16 in Nov

SHANGHAI, Nov 3 (SMM) – The purchasing managers' index (PMI) for the downstream nickel industries dipped to 40.16 in November, according to SMM data. This was 19.97 lower from October, and below the 50 that separates expansion from contraction. 

The index for raw materials inventory extended its decline in November, as it fell 20.79 from October to 21.64. Some downstream stainless steel plants stepped up operation ahead of potential higher US tariffs in 2019, and this depleted raw materials stocks. 

The production index came in at 39.51, down 36.96 from that of October, dragged down by the stainless steel and alloy industries. Overall cooling consumption and cash flow issues at the end of a year lowered production index for stainless steel, by 42.88 from October to 39.13. Weaker demand from petrochemical and container sectors declined the production index for alloy by 20.78 on the month to 35.88. 

Stainless steel and alloy industries also weighed the index for new orders to 26.89 in November, down 35.01 from October. Poorer orders across stainless steel plants over last month lowered the index by 40.02 from October to 24.3. 

The index for finished products inventory increased by 14.27 month on month to 70.55, supported by the stainless steel and battery industries. Fewer orders were received but stepped-up operation raised finished products inventory index for stainless steel to 75.01. 

For December, the preliminary PMI for downstream nickel industries stood at 35.64, down 4.52 further from November, SMM survey showed.

Lower indexes for production, new orders, and raw materials inventories in the stainless steel sector eroded PMI for the industry to 39.17 in November. This marked a contraction after four consecutive months of expansion. 

While some stainless steel plants stepped up operation ahead of potential additional US tariffs in 2019, downstream orders started to decline in November, and this lowered the overall production index from October. Poorer consumption for dishwasher and sink from overseas buyers and weaker demand for automobile and home appliances domestically accounted for declines in new orders in November. Cash flow issues at the end of a year also deterred downstream buyers from purchasing. 

The preliminary PMI for the stainless steel industry in December fell to 35.27 as production and new orders are expected to shrink further. Thinner profit margins declined scheduled production at steel mills by a greater scale in December than in November, SMM learned. 

The PMI for electroplating industry declined from October but beat expectations, to stand at 44.31 in November. Slower downstream consumptions and environmental probes in Jiangsu and Hunan provinces depressed both of the production and new orders indexes to 39.66, down 10.12 from October. 

The preliminary PMI in December for the industry stood at 22.63 amid a bearish outlook on production and new orders this month. Domestic lingered environmental impact and the Christmas vacation overseas will affect new orders in December. 

In the alloy industry, the November’s PMI slid 11.48 month on month to 42.33 as the production index slumped by 20.78 and stood at 35.88. A drop of 20.37 from October to 35.88 in purchasing volume index also accounted for the lower PMI. Though prices of raw materials continued to fall, poor orders from downstream petrochemical and container sectors slowed alloy producers’ purchases from mid-November. 
   
The industry's preliminary PMI in December came in at 44.04, up 1.71 from November but remained below 50. Higher demand from the downstream nuclear and military sectors bolstered the production index by 3.29 for December. However, the increase is limited as winter cuts affected production in the north.    

The PMI for the battery industry in November went up 2.05 from October to 49.8, higher than the expected 49.47. Improved demand in ternary battery industry lowered index for finished product inventors to 42.09 in November. Falling prices of nickel and cobalt lowered sharply the purchasing volume index by 31.61 from October to 21.14. 

In traditional nickel-hydrogen battery industry, both production and new orders indexes stood below 50, at 48.99, as producers limited production on cash flow problems. The preliminary PMI for battery industry is 45.95 in December as cash flow issues will cap production across battery mills. 

For other industries, the PMI stood at 40.75 in November, down 3.92 on the month, and under the expected 57.58. Overall slower demand across domestic markets saw index for new orders slumped to 24.3. Nickel mesh and wire plants cut output on fewer orders, and this lowered the production index to 40.43 in November. 

Cash flow problems at the end of the year will keep plants across other downstream industries operating below full capacity, driving the PMI in December to 44.38, SMM estimates.