SHANGHAI, Sep 5 (SMM) – Manufacturing activities across nickel downstream sectors barely improved from a month ago in August, remaining in contraction for the fifth consecutive month, showed an SMM survey on Wednesday September 4.
SMM data showed that the purchasing managers' index (PMI) for downstream nickel industries grew marginally on the month to stand at 49.19 in August, missing SMM expectations of 49.59. PMI for July climbed 5.43 on the month to 49.18. A reading below 50 indicates contraction.
The preliminary PMI for downstream nickel industries shed 0.6 from August, to 48.59 for September, SMM survey showed.
Last month, the sub-index for production failed to meet the expected 49.13 and stood at 48.85, as a limited pickup in downstream consumption capped increases in stainless steel production even as stainless steel prices moved higher with nickel prices and improved margins at producers.
The production index for stainless steel sector remained in contraction territory but climbed 1.08 from July and came in at 49.49. Output of #300 series held steady while poor orders dragged on production at some mills.
While a seasonal lull continued to keep the production index for alloy casting sector at lows of 32.64, production in battery sector resumed after about two months of destocking following subsidy cuts for new energy vehicles.
The sub-index for new orders across nickel downstream sectors lost 0.33 on the month to 47.91 in August, lower than the estimated 48.67, due to an absence of significant rally in downstream demand.
Rising prices drove downstream consumers to procure stainless steel only as required, and the alloy casting sector saw weaker orders from markets of home appliances, containers, and railroad. Demand for special steel continued to weaken.
New orders for batteries from the new energy market improved from a month earlier though they have yet to resume to levels before the subsidy cuts.
Elevated raw materials stocks, except for that in the alloy casting sector, pulled up the overall sub-index for raw materials inventories to expansion territory of 50.18% in August, from the previous 49.96%. Higher costs of feedstock and smaller orders kept stockpiles at producers of alloy and casting at lows.
The overall sub-index for finished products inventories also swung to expansion in August, as it rose 2.32 to stand at 51.91. Social inventories of stainless steel accumulated to record highs last month, buoying the sub-index for stainless steel finished products stocks to 52.82.