SHANGHAI, Aug. 2 (SMM) – SMM survey finds that nickel purchase managers’ index (PMI) was 60.74 in July. The reading, standing much higher than 50, is due mainly to high production activities at stainless steel mills for decent orders. PMIs from other downstream sectors, including electroplating, battery, and alloy were below 50 in July.
The composite production index was 63.23% in July. Expansion of the reading indicates that downstream demand was not weak in the off-season.
Decent New Orders
In July, new orders were positive, with the index at 56.74%, but new export orders waned along with negative impact on stainless steel and battery exports from summer break in Europe, with the reading at 49.01%.
Finished Goods Inventories Fall
The composite finished goods inventory index was 24.33% in July, as decent new orders sent down finished goods inventories at nickel downstream producers.
Stock-piling Demand Increases
The composite raw material inventory index was 66.60% in July, and high stock-piling activities echoed decent new orders.
Nickel PMI by Downstream Industry
In July, stainless steel PMI was 65.12%, while PMIs from other nickel downstream sectors, including electroplating, battery and alloy were below 50, especially the latter two. Battery PMI was 34.61% in July as some export-oriented large battery producers reported low production and poor orders, while other producers suffered from high temperature. Alloy PMI was 36.79% in July for two factors. First, some alloy producers ran at low rates due to summer heat, sending down production index below 50. Second, most of alloy producers reported poor orders, and rising nickel price further weakened their buying interest in raw materials.
Electroplating PMI was 48.06% in July, with index of production and new orders at 31.16% and 40%, respectively, all below the 50 mark. High temperature and environmental factor in some regions depressed production at electroplating producers. Orders waned in July. Some producers made moderate raw material purchases as they expected to grow output after environmental protection inspections.
Alloy PMI was 36.79% in July. Production at alloy producers was mainly influenced by high temperature and poor orders, and conditions varied much by size of producers. Large producers receive orders mainly from military, nuclear power, petrochemical sectors, and those orders are largely completed in the first half of the year. Hence, orders at large producers from those high-end industries began to wane in the second half of the year. Small producers reduced production due to high temperature, both sending down the production index across the sector. Alloy producers also reduced raw material inventories due to falling expectations over order growth.
Battery PMI was 34.61% in July. Battery producers reported weak export orders and low production over the month, and they also cut raw material inventories.
Stainless Steel Industry
Stainless Steel PMI was 65.12% in July thanks to decent new orders, high production and stock-piling activities. In July, stainless steel mills showed high production enthusiasm as rapid price gains after purchases by downstream producers and traders created high profits. Stainless steel plants also entered the market for raw material purchases for production needs.
PMI in other nickel downstream sectors was 35% in July. High temperature negatively affected production and orders over the month. Meanwhile, nickel demand from those sectors is relatively smaller, and producers in those sectors mainly purchase raw material based on orders. Hence, poor orders reduced their demand for raw materials, with the index weakening.
Forecast for Orders in August
Based on SMM survey of new orders at nickel downstream sectors, the new order index in the stainless steel sector is expected to remain high in August, and orders in the electroplating sector is also estimated to be higher than July’s with the end of environmental protection inspections in some regions.
For news cooperation, please contact us by email: email@example.com or firstname.lastname@example.org.