China factories still in doldrums; official Sept PMI at 49.8

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SINGAPORE (ICIS)–China’s official manufacturing purchasing managers’ index (PMI) in September stood at 49.8, the second month the reading stayed below 50, indicating continued contraction in the country’s overall industrial activities, official data showed on Thursday.

But the September reading was a slight improvement from 49.7 in the previous month, according to the China Federation of Logistics and Purchasing (CFLP).

A PMI reading above 50 indicates an expansion in manufacturing activity, while a reading below points to a contraction.

The production sub-index for September stood at 52.3, up from 51.7 in August, while the sub-index for new orders rose to 50.2 from 49.7 in the previous month amid a slight improvement in demand, CFLP data showed.

Separately, a private PMI survey done by media group Caixin showed a final reading of  47.2, slightly better than its flash reading of 47.0 for the month but down from 47.3 in August.

The Caixin manufacturing PMI focuses on small and medium-sized firms in China, while the official index tracks large firms such as state-owned enterprises.

China is the world’s second-biggest economy and is a major importer of petrochemicals in Asia. Concerns about its economic slowdown have been haunting the commodities and equities markets for months.

On Thursday, however, market reaction to the downbeat data was muted with the Chinese markets closed, as the country started its week-long National Day celebration.

Regional petrochemical and equities markets largely shrugged off the data, with some investors expecting the Chinese government to implement stimulus measures to prevent a further deterioration in the country’s manufacturing conditions.

At midday, prices of open-spec naphtha for second-half November rebounded in tandem with crude futures, with ethylene, benzene and toluene markets also showing minimal movements.

In South Korea, LG Chem closed 0.88% higher, while SK Innovation rose by 3.06% as the KOSPI index inched up 0.84% to 1,979.32.

In Japan, Mitsui Chemicals rose by 2.88% while Mitsubishi Chemicals was 2.30% higher as the benchmark Nikkei 225 index gained 1.92% to 17,722.42.

At 07:00 GMT, PTT Global Chemical shares were up by 0.47% in Thailand, while shares of PETRONAS Chemicals Group were down 0.81% in Malaysia.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections