Composite PMI for Stainless Steel Sector Stood Above the 50-Point Mark in August with Slightly Increased Orders

SHANGHAI, Sept 1 (SMM) – In August 2022, the supply of nickel raw materials was in a surplus as the inflow of Indonesia's NPI rose significantly. The steel mills also increased the purchase of raw materials substantially. Extending the production reduction in July, steel mills further cut the production in August, and in late August, steel mills controlled the amount of arrivals on purpose. At the same time, the downstream demand picked up slightly as the stainless steel spot prices stopped falling and stabilised. As a result, the overall inventory was shrinking. This indicated that the overall stainless steel sector was recovering slowly, and the PMI composite index for it stood at 50.46. In terms of sub-items, steel mills had taken the initiative to reduce the production in July in order to consume the stocks which was already high enough. In August, the production reduction continued to expand, and the production index was below 50-point mark at 48.69. Raw material prices declined further in August, while stainless steel prices first fell and then stabilised. The steel mills maintained purchasing as needed.

In September, there is not much downward room for NPI prices, so the purchase volume of steel mills may be flat from that in August. Meanwhile, steel mills are expected to increase the production, thus it is expected that the index for raw material inventory may be higher compared with August. The consumption is likely to recover in September with growing market confidence, hence the index for new orders is expected to stand above the 50-point mark. SMM expects that the composite PMI for the stainless steel sector will stand at 50.92 in September, indicating an improving market.