In June, the national manufacturing PMI was 49.5%, flat MoM, showing overall stability but still below the 50 mark. Among them, the production index was 50.6%, with the production indices of metal products, railways, ships, and aerospace industries still exceeding 50%. Stainless steel-related downstream industries maintained certain demand. The new order index was 49.5%, consistent with the weakening demand for stainless steel. According to SMM, the stainless steel PMI in June was 49.87%, with the production index at 49.84%, the new order index at 49.85% and the raw material purchase index at 49.78%. Entering the traditional off-season in June, downstream operating rates declined, causing fewer stainless steel orders. Additionally, the rise in prices of raw materials such as NPI elevated the production costs of stainless steel, resulting in losses for steel mills and a decline in output.
SMM predicts the stainless steel PMI for July to be 49.78%, with the production index at 49.67%. Due to the continued weakening of the market in Q2, end-users are expected to make purchases as needed. Therefore, the pressure on social inventory and in-factory inventory is prominent, leaving oversupply unsolved. With continuous losses and no improvement in demand, stainless steel mills showed a low willingness to produce, with several in East China and South China reporting plans to reduce production. In summary, it is expected that the production and new order indices will continue to be lower than the 50 mark.
