The stainless steel PMI for May was 50.05, with manufacturing demand lower than expected [SMM Analysis]

The national manufacturing PMI for May was 49.5%, down 0.9 percentage points MoM, indicating a decline in overall manufacturing prosperity. The production index was in expansion territory, while the new orders index recorded a drop of 1.5 percentage points, reflecting a slowdown in end-user demand. SMM stainless steel PMI was 50.05%, slightly weaker than last month's forecast. The production index was 50.32%, mainly due to high scheduled production and operating rates at stainless steel mills, with overall output significantly increasing compared to April. The new orders index was 50.04%, a notable decline from the previous forecast. May demand did not extend April levels, as demand from end-users entered the off-season, leading to weaker stainless steel transactions and a drop in the product inventory index to 49.86. Meanwhile, the continuous rise in NPI prices pushed up the costs for stainless steel mills, causing the raw material purchase price index to fall to 49.75.

Overall demand for stainless steel in June is expected to remain at May levels. As stainless steel mills accepted poor orders, the new orders index is expected to drop to 49.70 in June. However, since stainless steel mills still maintained some profits, the reduction in production is expected to be minimal or steel mills may produce at a relatively low capacity. As a result, the production index is forecasted at 49.95. The comprehensive PMI for stainless steel in June is expected to be 49.85, indicating a stable overall market trend.