SHANGHAI, Aug 2 (SMM) – Manufacturing activities across nickel downstream sectors grew more than SMM’s expectations on the month in July, but remained in contraction, for the fourth straight month, showed an SMM survey on Friday August 2.
SMM data showed that the purchasing managers' index (PMI) for downstream nickel industries climbed 5.43 from June, to stand at 49.18 in July, beating expectations of 41.97. PMI for June lost 0.86 on the month to 43.75. A reading below 50 indicates contraction.
Ramped-up production of stainless steel and improved orders from the battery sector accounted for the increase in July.
For August, the preliminary PMI for downstream nickel industries extended its increases by 0.34 from July, to stand at 49.52, SMM survey showed.
Production at stainless steel mills and high-nickel battery plants picked up in July, which buoyed the overall sub-index for production by 9.61 from June, to 48.92.
The production sub-index for stainless steel industry rose 8.37 on the month, but remained below 50 at 48.41, as some producers scaled back output of #300 series products. Producers of high-nickel batteries moved up a gear in July, driven by new subsidy policies for electric vehicles (EVs), but the overall EV battery market failed to recover completely after a full subsidy cut.
Higher-temperature weather and environmental probes kept the production sub-index for alloy sector far below the 50 mark, at 35.6 in July.
Greater demand for batteries with high-nickel content bolstered the new orders sub-index for the battery industry, to 67.53, compared with a low of 12.63 in June and the expected 42.33.
New orders for stainless steel weakened after prices of stainless steel followed nickel prices higher last month. Orders in the alloy sector also performed poorly as downstream demand for home appliances, containers, and special steel cooled.
Slow purchases kept alloy producers from restocking raw materials, which held the overall sub-index for raw materials inventory limitedly changed in July, at 49.96%.
The overall sub-index for finished product inventory grew slower than expected, by 1.59 from June to 49.59 in July, as downstream demand for batteries resumed.