British manufacturing activity contracted sharply in April after a preliminary IHS Markit/CIPS UK survey, published on April 23, showed that the purchasing managers’ index (PMI) plummeted to 32.9 in April, compared with 47.8 the prior month.

 

Factory closures, social distancing measures, and restrictions on movement have resulted in a rate of contraction in the manufacturing industry far exceeding that witnessed during the global financial crisis, and in the whole of the survey’s 22-year history.

 

Chris Williamson, chief business economist at IHS Markit, commented that “simple historical comparisons of the PMI with GDP indicate that the April survey reading is consistent with [UK] GDP falling at a quarterly rate of approximately 7pc.”

 

Falling manufacturing output has been accompanied by job losses on an “unprecedented scale” and pricing power has also collapsed alongside the slump in demand, leading to the largest drop in average prices charged for goods and services.

 

These latest figures will make tough reading for the UK ferrous metals industry, given that deteriorating manufacturing activity has, and will, decimate steel consumption in the immediate future.

 

At the same time, vastly reduced manufacturing output will also significantly affect the generation of prime/prompt ferrous scrap grades; meaning mills and scrap yards will compete over tighter supply availability and pay potentially higher rates.  

 

 

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