China nickel manufacturing expanded for sixth consecutive month in August

SHANGHAI, Sep 1 (SMM) — Manufacturing activity across nickel downstream sectors in China expanded for the sixth consecutive month in August.

SMM data showed that the purchasing manager's index (PMI) for downstream nickel industries, including stainless steel, electroplating, alloy and battery, stood at 53.24 in August, up 3.04 points from a month ago. A reading above 50 indicates expansion.

The preliminary nickel downstream sectors PMI for September is assessed at 51.94, slipping 1.3 percentage point from the final reading for August and remaining in expansionary territory.

Production sub-index higher in August

The composite sub-index for production increased 4.08 points from July to 54.55 in August, staying in expansion. The production sub-index in the stainless steel sector rose 2.48 points month on month to 53.05, as decent profits of #300 stainless steel encouraged steelmakers to keep high operating rates. The production sub-index in the electroplating sector rebounded to 50.55 in August as some large-scale plants slightly raised output. Most of the small electroplating plants in south China still kept low operating rates. Production in other nickel downstream sectors were also in the expansionary territory. 

New orders sub-index expanded significantly in August, with robust orders at stainless steel mills

The overall sub-index for new orders across downstream nickel sectors rose 6.54 points on the month to 56.85 in August, remaining in expansion. The new orders sub-index in the stainless steel sector fared better than expectations, coming in at 56.42, as demand from infrastructure, petrifaction and equipment increased. In the battery sector, the new orders sub-index climbed to 76.18, as domestic orders of high-nickel ternary batteries and NI-MH batteries increased significantly. Robust domestic demand lifted the new orders sub-index in the alloy sector to 54.82 in August. 

Raw materials inventory sub-index returned to expansion, downstream users more willing to accept high feedstock prices 

The overall sub-index for raw materials inventories inched up 0.94 points month on month to 50.31 in August, returning to an expansionary territory. The raw materials stocks sub-index in the stainless steel sector remained unchanged at 50 as most of the steelmakers stockpiled on demand. In the battery sector, inventories of finished products and raw materials were largely unchanged on the month as battery makers restocked as required. Given strong nickel futures contracts and stable demand, they were bullish on refined nickel prices in the near term. 

Finished goods inventory sub-index in expansion, inventory pressure in the stainless steel sector did not hike

The overall sub-index for finished products stocks edged up 0.4 point from July to 50.44 in August. Finished products inventories at steelmakers were stable, with the sub-index standing at 50 in the stainless steel sector.