SHANGHAI, Mar 4 (SMM) – The purchasing managers' index (PMI) for the downstream nickel industries for February stood below 50 for the fourth consecutive month, at 47.33. This occurred after an increase of 1.57 from January, showed SMM data. A reading below 50 indicates contraction.
The sub-index for production nudged up 0.54 and came in at 42, supported by the downstream stainless steel sector. CNY closures and a seasonal lull lowered production across the alloy and battery sectors, and this capped gains in the sub-index for production.
Improved orders in the stainless steel, especially orders for #300 series in Jiangsu province, buoyed the sub-index for new orders by 9.11 on the month, to 49.18 in February, driven by downstream stockpiling after CNY.
The sub-index for raw materials inventory fell 23.36 from January to 48.88 in February, as producers of stainless steel and batteries barely purchased after they stockpiled in January.
Lower inventory pressures in-plant across downstream sectors lowered the sub-index for finished product inventory by 2.63 to 42.59 in February.
For March, the preliminary PMI for downstream nickel industries rebounded above 50, to stand at 65.30, up 17.97 from February, SMM survey showed.
Stainless steel
In the stainless steel sector, greater new orders and higher purchasing prices pulled up the comprehensive PMI for the industry by 0.84, to register 48.05. This remained in contraction territory but exceeded expectations.
Robust prices of nickel extended increase in the sub-index for purchasing prices, to 90.92 in February. The sub-index for new order jumped 7.38, and came in at 50.95 last month.
Stainless steel mills did not restock excessively in January, and this lowered the sub-index for raw materials inventory by 25.22, to 49.19 in February.
The preliminary PMI for the stainless steel industry in March increased to 65.87 amid an upbeat outlook on downstream demand after CNY breaks. Preliminary readings of sub-indexes, except for inventory of finished products, stood higher than 50 in March.
Despite an overall optimistic outlook on nickel prices in March, sub-index for purchasing prices fell 38.32 from February, to 52.56, as steel mills did not expect nickel prices to extend their robust trends through the month.
Electroplating
The PMI for electroplating industry climbed from January and exceeded expectations, to 45.66, as a smaller impact from CNY and environmental rectification bolstered new orders and production.
Both the sub-indexes for new orders and production increased 19.33 on the month, to 42.11 in February.
The preliminary PMI in March for the industry was 69.04, with sub-indexes for production and new orders standing both at 84.62 as producers resume normal operation.
Alloy
Across alloys, the PMI for February slid 8.46 from January to 41.54, missing expectations. A drop of 15.56 in indexes for production, new order, and purchasing volume accounted for the lower PMI, Last month, some alloy plants closed for the holidays and continued to impose winter curbs in Hebei and this affected local production.
The alloy industry's preliminary PMI in March came in at 57.81, up 10.96 from February, as the end of heating season, higher downstream demand in petroleum, chemical, nuclear, and military sectors will boost sub-indexes for production and new orders by 19.92 on the month.
Battery
The PMI for the battery industry in February lost 3.37, and stood at 44.14, compared with the expected 50.43. CNY factors, fewer orders from the traditional nickel-hydrogen battery sector lowered the sub-index for new orders and production, and this accounted for the lower PMI. The preliminary PMI for the battery industry will nudge up to 62.10 in March, on the expectations of improved demand after the holidays.
For other downstream industries, the PMI registered 49.87 in February, up four points on the month, the highest since October 2018. While late resumptions across the nickel wire and mesh sectors lowered production sub-index by 6.85 in February, new orders improved to 56.85.
For March, the PMI across other downstream industries will climb 6.18 from February, to 56.05 as higher orders prompt downstream mills to accelerate production.
