Stainless steel PMI returned to expansion territory in April and is expected to improve in May [SMM Analysis]

In April, the national manufacturing PMI increased to 50.4%, and the SMM PMI for the stainless steel sector was 50.1%, returning to expansion territory. Steel mills maintained a high level of production in April. Some resumed production and adjusted early production reduction plans due to good profits. The overall production index was 50.25%. Due to declining stainless steel prices in late March and early April, agents were not willing to accept orders and pick up goods, causing the new order index in April at 49.96%. On the supply side, in order to force agents to pick up goods, steel mills significantly reduced the amount of goods distributed to the market. Some steel mills held increasing inventory, but social inventory dropped in April, so the finished product inventory index was 50.01%. With a large price hike in high-grade NPI and rising prices of raw materials including high-carbon ferrochrome and coal, the purchasing price index of steel mills in April was 49.69%.

With the increase in the operating rate and the continued positive outlook for China's manufacturing industry in May, stainless steel terminal consumption is expected to strengthen in May. Considering decent production schedules and orders in steel mills, the production index and new order index are expected to be 50.17% and 50.31% respectively in May. The PMI for the stainless steel sector will be 50.11% in May.