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Downstream nickel PMI rises from Aug to 58.42 in Sep

iconSep 30, 2018 14:24
Sep's reading was 3.26 higher from August, and above the 50 that separates expansion from contraction

SHANGHAI, Sep 30 (SMM) – The purchasing managers' index (PMI) for the downstream nickel industries stood at 58.42 in September, according to SMM data. This was 3.26 higher from August, and above the 50 that separates expansion from contraction. 

The index for raw materials inventory rallied 13.37 from August to 87.87 in September. The raw materials inventory index for the stainless steel industry, rising to the highest since February, accounted for the overall increase. Steel mills restocked first-grade nickel as its price dipped in September.   

The production index came in at 54.37, down 2.63 from that of August, affected by the battery industry. Although high season set in this month, cash flow issues kept the production index for the battery industry at 49.27.  

Electroplating and stainless steel industries supported the index for new orders to stand at 68.16, up 12.01 from August. Higher consumption in high season raised new orders index for the electroplating sector by 0.29 from last month. Stainless steel industry’s new orders index grew 13.33 from August to 68.27, as demand for domestic #300 stainless steel improved in late September. Such higher demand came from the engineering sector and overseas buyers. 
The index for finished products inventory slid by 8.0 month on month to 49.74, depressed by the stainless steel industry. Improved demand for domestic #300 stainless steel shrank stocks of finished products.  

For October, the preliminary PMI for downstream nickel industries stood at 66.63, up 8.21 from the final reading in September, SMM survey showed.

Robust indexes for raw materials inventory, new orders, and production in the stainless steel sector buoyed PMI for the industry to 58.13 in September. Its raw materials inventory index jumped to the highest since February this year, at 94.71, up 15.12 from August. Steel mills stockpiled when price of first-grade nickel as raw materials fell this month, and this led to the higher inventory index. 

The new orders index grew 13.33 from August to 68.27, as demand for domestic #300 stainless steel improved in late September. Such higher demand came from the downstream engineering sector and overseas buyers after summer break in Europe. The export orders index in September rose 9.4 to 50, with strong foreign demand for hot-rolled products. 

It also worth noticing that annual maintenance at some steel mills increased the backlog orders index by 7.93 from August to 57.93 this month. 

The preliminary PMI for the stainless steel industry in October rose to 69.3 as production and new orders are expected to extend their rises. Meanwhile, some stainless steel plants in the south will continue to raise production of the #300 series. Mills that suspended for maintenance this month will resume production in October. 

The PMI for electroplating industry inched up from August to 68.48 in September as greater consumption grew new orders and production. However, the rise fell short of SMM expectations. The preliminary PMI in October for the industry stood at 58.32 amid bleak outlook on the growth in new orders and production, in light of the upcoming National Day holiday.  

In the alloy industry, the September’s PMI gained 0.97 month on month to 54.11 as downstream higher demand from nuclear electricity and military sectors boosted production across Hebei and Jiangsu provinces. Both the production and new orders indexes increased 1.77 to 57.41. Downstream purchasing index rose 0.08 to 56.73 this month, in line with SMM expectations. 

The industry’s preliminary PMI in October came in at 54.37, up 0.26 from September. Higher demand from the container sector bolstered the production and new order index by 0.52 for October. However, the increase is limited as production in the north will be affected by curbs for the upcoming heating season. 

The PMI for the battery industry in September rose 6.0 from August to 53.16, beating the expected 49.47. The new orders index surged to 59.8 amid high season for ternary battery, with some producers operating at full capacity. While onset of peak season grew the production index to 49.27, continued cash flow issues across nickel hydrogen battery plants kept the figure below 50 that separates expansion from contraction. 

The preliminary PMI for battery industry stood at 48.8 in October, as breaks during the National Day holiday will drag down production. 

For other industries, the PMI stood at 62.74 in September, up 5.84 from August, but well under the expected 71.99. Indexes for production and new orders increased to 83.22 and 63.01, respectively, as low season for the nickel mesh, wire sectors ended. Affected by the upcoming holiday, the PMI in October is expected to fall to 51.5. 

Market commentary

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