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Nickel downstream sector activity contracts for 6th straight month in Sep  
Oct 8,2019 11:50CST
Scheduled production cuts of #300 stainless steel will continue to lower PMI for downstream nickel industries in Oct

SHANGHAI, Oct 8 (SMM) – Manufacturing activities across nickel downstream sectors fell from a month ago and remained in contraction for the sixth consecutive month in September, as demand for stainless steel and batteries recovered sluggishly, showed an SMM survey on Tuesday October 8.

SMM data showed that the purchasing managers' index (PMI) for downstream nickel industries dipped 0.24 on the month to stand at 48.95 in September, better than SMM expectations of 48.59. PMI for August inched up on the month to 49.19. A reading below 50 indicates contraction.

The preliminary PMI for downstream nickel industries continued to slip 2.51 from September, to 46.44 for October, on scheduled production cuts of #300 stainless steel, SMM survey showed.

SMM learned that a stainless steel producer in east China planned to slash production of #300 series by 20,000 mt this month, amid high inventories and raw materials costs, and some producers in the north also mulled scaling back output of #300 stainless steel. 

Last month, the sub-index for production exceeded the expected 47.49 and stood at 48.69, slightly down from a month ago as slow demand capped growth in battery production. 

Stainless steel output did not fall significantly in September as producers with cheap raw materials stockpiles kept normal operation. Alloy mills stepped up production last month on expectations of potential environmental controls in the special steel industry in October.

The sub-index for new orders across nickel downstream sectors climbed 0.88 on the month to 48.79 in September, beating the estimated 46.9 though remaining in contraction. Frontloading before the National Day holiday in the battery sector accounted for the increase. 

New orders in the stainless steel sector underperformed the production, but they were limitedly dented by higher prices of stainless steel on the greater acceptance of higher prices across downstream consumers. 

Downstream orders for alloy improved from a month ago, with the new orders index for alloy sector expanding 15.23 in September. However, the index weakened from the same period last year on smaller margins. 

The overall sub-index for raw materials inventories swung back to contraction territory, which slipped 9.07 from August to 41.11 in September, as robust prices of nickel deterred stockpiling across stainless steel mills.

The overall sub-index for finished products inventories remained in expansion in September, as it limitedly changed at 51.77. Resumption of battery production and a slow pickup in downstream demand grew finished products stocks at battery producers.

Market commentary

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