China nickel manufacturing contracted for tenth consecutive month in January

SHANGHAI, Feb 5 (SMM) – Manufacturing activities across nickel downstream sectors in China slowed from a month ago in January and stayed in contraction for the tenth consecutive month, but the decline was smaller than the previous estimates, according to a SMM survey.

SMM data showed that the purchasing managers' index (PMI) for downstream nickel industries, including stainless steel, galvanising, alloy and battery, stood at 48.7 in January, down 0.81 from December. A reading below 50 indicates contraction.

Last month, the composite sub-index for production edged down 0.55 from December but held up better than the expected 41.43, standing at 45.39.

Suspension of some stainless steel producers during the Chinese New Year holiday accounted for the lower production index. The greater-than-expected scale of shutdown for stainless steel mills in Guangdong due to the coronavirus outbreak also weighed on production.

According to SMM data, the overall sub-index for new orders across downstream nickel sectors contracted in January, falling 2.02 on the month to 49.16, 3.62 higher than expectations.

The overall sub-index for raw materials inventories fell significantly from 55.65 in December to 48.68 in January, as inventories were consumed after downstream producers slowed purchases after necessary stockpiling pre-holiday, and as large downstream plants with sufficient inventories also scaled back purchases.

The overall sub-index for finished products stocks, however, flipped to an expansion in January, standing 5.65 higher from a month ago at 53.39.
Finished product inventories in other nickel downstream sectors held flat last month as producers mostly produced according to orders.