The PMI (JPMorgan Global Manufacturing Purchasing Managers’ Index™) fell to 50.3 from 51.1 points in August 2022 in the previous month. This is the lowest index since June 2020. S&P Global’s press release reports about it.
Production volumes increased in only 10 countries out of 30. In five of them, including China, the growth was insignificant. Production indicators decreased in the USA, the Eurozone, the UK and Japan.
The preliminary values of the indices indicate that in the coming months the deepening of negative trends in industrial production is expected. New orders continued to fall at an increased rate in August, and inventory levels continued to rise amid weaker than anticipated sales.
The manufacturing PMI in the global manufacturing sector, which is a reliable indicator of actual global manufacturing trends several months ahead, signals a slight decline in global industrial production. Such a decrease is observed for the third time in the entire history of index calculation.
“Although the downturn appears to be small now, it will gather momentum in the coming months, seeing the marked decline in the PMI. Most importantly, the ratio of new orders to inventories fell even further in August to August 2009 levels. Thus, the difference between output and new orders will force manufacturers to adjust their production plans for the coming months downwards,” S&P Global writes.
As demand fell and supply restrictions eased, there was a cooling in price pressures. Most suppliers began to offer better prices for materials in order to sell warehouse stocks to manufacturers, while manufacturers themselves are left with stocks of materials and finished products. Because of this, price power has shifted from sellers to buyers.
As GMK Center reported earlier, since August, a number of steel companies in Europe have decided to reduce or stop production due to high electricity prices and weak demand for steel. Most coil manufacturers have been operating at reduced capacity recently and have planned longer summer maintenance work, but some have decided to stop production.
ArcelorMittal Corporation plans to stop one of the three blast furnaces at the plant in Bremen (Germany) at the end of September 2022. ArcelorMittal will also stop a direct reduction plant in Hamburg, where it produces wire rod, from the fourth quarter.
Also, ArcelorMittal plans to shut down one of the blast furnaces at the plant in Asturias (Spain) at the end of September 2022. The company also delayed launching the EAF at the Spanish plant Acería Compacta de Bizkaia, which was supposed to be launched at the beginning of September after maintenance.