SHANGHAI, Nov 4 (SMM) – Manufacturing activities across nickel downstream sectors in China marginally improved from a month ago but remained in contraction for the seventh consecutive month in October, as demand for stainless steel recovered sluggishly, according to an SMM survey.

SMM data showed that the purchasing managers' index (PMI) for downstream nickel industries, including stainless steel, galvanising, alloy, and battery, stood at 49.32 in October, better than SMM expectations of a drop to 46.44.

PMI for September edged lower on the month to 48.95. A reading below 50 indicates contraction.

Weakness in the nickel downstream sectors will continue in November, as the preliminary PMI was assessed to fall to 46.44 in November. 

The sub-index for production was far above the expected 37.38, standing at 48.79 for October, as most stainless steel producers maintained stable operation in October despite losses.

Production at battery plants, meanwhile, reduced significantly as producers took a break during the week-long National Day holiday. Producers in other nickel downstream sectors, such as nickel wire, mesh, and printing industry, also scaled back operation during the holiday. 

Overall demand for stainless steel weakened from a month ago in October, but orders for #300 products remained solid, compared with that for #200, due to concerns about hot-rolled coil supply at a stainless steel mill in east China. 

This, coupled with improvement in demand for galvanising, lifted the sub-index for new orders across downstream nickel sectors to 49.26, beating expectations of 48.71 though still below the 50-mark. 

The increase in new order sub-index was capped by weakness in the battery industry, due to frontloading of demand.

The battery sector also weighed on the overall sub-index for raw materials inventories, as battery producers depleted stockpiles and held back purchasing after premiums of nickel sulphate over refined nickel prices recovered. 

The overall sub-index for raw materials stocks remained below the growth-contraction threshold, standing at 47.76.

The overall sub-index for finished products inventories swung back to contraction territory, falling 2.71 from September to 49.06 last month, as stocks of stainless steel continued to pile up on an absence of a pickup in downstream demand.