Outlook for Stainless Steel PMI in May under the Pressure of the Pandemic and the Tight Supply of Raw Materials

SHANGHAI, May 5 (SMM) - At present, the pandemic weakens the consumption, and orders of stainless steel continue to be weak and stable. The high prices of nickel-based raw materials and the high production costs also bring great pressure to steel mills in the downstream industry of nickel and the spot market. According to the SMM survey of PMI in April, the stainless steel industry lies below the 50-point mark.

Stainless Steel Industry

In April 2022, smelters cut their production due to logistics restrictions and the shortage of raw materials. Besides, the demand was dragged down by the COVID-19 outbreaks in some regions of China. Therefore, the overall performance of the stainless steel industry was in the contraction range, and the PMI composite index stood at about 48.33%. In April, the new order index and the production index stood below the 50-point mark. The nickel prices remained firm as the import window was closed in April. In addition, smelters could not purchase raw materials normally due to the supply tightness of nickel-based raw materials. Although the pandemic related logistics restrictions were lifted somewhat, the downstream still held a wait-and-see attitude. In terms of exports, the export orders performed better as the demand from the European countries and the US was hot. Therefore, in April, the export order index and the supplier delivery time index stayed beyond the 50-point mark at 51.95% and 51.34% respectively.

In May, due to the closed import window and the large consumption of in-plant inventory of ferronickel, the supply of NPI continued to be tight, and the steel mills had to accept the current prices of raw materials, hence the index for raw material inventory rose compared with April. The favourable policies on the macro front in May will boost the market’s confidence. After the Labour Day holiday, orders may improve, and the new order index may reach 50.87%. However, the price increase in raw materials will be limited, and the index will change little. What’s more, the consumption may pick up. Therefore, the PMI index of the stainless steel industry stood at over the 50-point mark. In the expansion range, the PMI in the stainless steel sector will probably stand at 50.07% in May.

Disclaimer:

The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.