Plastic, Silicone, Steel, and Others: Updated China Raw Materials Costs (late April ’24)

Here’s the monthly update from Sofeast’s sourcing team, tracking the costs of commonly used raw materials from China for the past year to help you understand where the market is right now. If you or your supplier are purchasing materials from China for your products, the cost changes you see here impact your bottom line!

Here’s the up-to-date material cost data from China for you as of late April 2024 and the price evolution over the past twelve months – the cost of Li-ion batteries has fallen and stayed low, which is perhaps unsurprising given China’s dominance in their manufacture. In contrast, other raw materials have been somewhat stable:

Here you can see the individual cost evolution per material over the past year, including the weekly and monthly change for April 2024:

Here is what our market analysts attribute these changes to during this past month:

Epoxy Resin (E-51) – Decrease of 0.19%

This week, the epoxy resin industry chain faces several challenges. There is a general lack of cost support for most products, cautious market demand, and a tendency for prices to fall rather than rise. The impact is more significant on upstream products, where losses are more noticeable.

Specific price movements of key materials and products are as follows:

• Phenol: The price of phenol, a key raw material, has slightly decreased. This drop is mainly due to the falling prices of pure benzene. Traders have been able to profit from this decline.
• Intermediate Products (Bisphenol A and ECH): Prices for these intermediate products have also fallen over the week. The main reasons are weak demand for downstream epoxy resins and an oversupply in the market that has led to lower selling prices.
• Downstream Products (PC): Prices for downstream polycarbonate (PC) are relatively stable with minimal fluctuations. The market for PC lacks significant news, with stable factory offers and demand-driven purchases.

In terms of market drivers, the primary factor influencing the industry this week is the balance of supply and demand. The prices for key materials like phenol, bisphenol A, and epoxy resins are dragging down due to their costs and shifts in market demand.

ABS AG-15E1 – Increase of 7.32%

This week, prices in the ABS (Acrylonitrile Butadiene Styrene) market initially increased but later stabilized. This initial rise was due to a decrease in the availability of standard materials, which positively influenced market sentiment and prompted middlemen to focus on pricing strategies.

In terms of raw materials:

• The price of upstream styrene increased initially but then decreased.
• Acrylonitrile prices rose slightly.
• Butadiene prices saw limited changes.

These fluctuations led to a slight weakening in the cost pressures that typically push prices up. Additionally, the industry is currently facing losses, which have resulted in a reduction in overall production.

On the demand side, there is a lack of strong replenishment needs from downstream sectors like home appliances, despite it being their peak season. This mismatch has resulted in mixed market activity, with some strong and some weak sales.

Silicone (110) – Decrease of 21.26%

This week, prices in the 110 raw silicone rubber market continued to drop. The decline in prices was influenced by several factors:

• Increased Resistance to New Orders: There’s been a growing reluctance in the raw rubber market to place new orders, primarily due to weak demand for rubber mixing from downstream sectors.
• Profit-driven Shipments: Some companies with high inventory levels decided to sell their excess stock at lower prices to make quick profits, which pulled the overall market prices down.
• Price Reductions by Leading Companies: The major players in the market reduced their prices by 400 yuan per ton, prompting other domestic manufacturers to follow suit and lower their prices as well.

After these price reductions, the response from the downstream buyers was that the price drop was less than they expected. This has led to a continued pessimistic outlook among them. In response to the falling prices, businesses with low inventory are taking advantage by buying up stock at these lower prices to cover their positions.

Overall, this paints a picture of a market where prices are falling, but not enough to satisfy downstream expectations, leading to ongoing caution and strategic purchasing among buyers.

Zinc Alloy (Zamak5) – Increase of 7.59%

This week, spot prices for zinc experienced a significant increase. Despite the rise, the overall market sentiment regarding shipments remained positive. Downstream buyers continued purchasing only what was necessary, indicating that the overall demand has remained limited.

Some businesses opted to stock up on inventory before the holiday, which helped drive a few more transactions than usual. Despite these fluctuations, zinc supplies remained readily available throughout the month, suggesting a steady market supply.

AL Alloy ADC 12 – Increase of 0.92%

On the supply side, major aluminum production facilities are operating smoothly. In Yunnan, over 500,000 tons of aluminum production capacity that had been halted has now been resumed. Despite this resumption, the increase in aluminum ingot availability in the short term is expected to be limited, and there is currently no significant pressure on supply.

PVC (SG-3) – Decrease of 2.12%

Here are the expected market dynamics for PVC powder next week:

• Impact of May Day Holiday: Due to the May Day holiday, some companies that use PVC powder in their products will be closed. This break could lead to a regular increase in the amount of PVC powder available in social inventories, as fewer businesses will be using the material, creating some pressure on spot markets.
• Support from Other Markets: Despite the pressure from increased inventories, the market sentiment for related products, often referred to as ‘black products’, is currently strong. This positive atmosphere in related markets might provide some support to PVC powder prices.
• Market Expectations: Fundamentally, the PVC powder market lacks a clear direction driving it strongly in either an upward or downward trend. Therefore, it is expected that PVC powder prices will continue to fluctuate within a certain range over the next week. However, the general trend for prices is expected to shift slightly upward.

Overall, while the holiday might lead to an increase in stock levels temporarily impacting prices, the strong performance in related markets and the expected slight upward movement in prices suggest a stable yet cautiously optimistic outlook for PVC powder in the short term.

Paper for Color Box (157g) – No change

Paper for Carton (AA120G) – Decrease of 5.38%

As we approach the May Day holiday next week, here’s what’s expected in the paper industry:

• Shutdowns and Supply: Some paper mills have announced plans to shut down temporarily, which is anticipated to reduce the supply of paper on the market.
• Downstream Demand: Conversely, downstream packaging plants are preparing for the holiday by storing up supplies. This action is likely to reduce the consumption of finished paper products such as corrugated and boxboard paper.
• Inventory Pressure: Despite the reduced supply from shutdowns, upstream paper mills are facing high inventory pressures. This situation might lead them to implement profit promotion policies to clear out excess stock.
• Market Outlook: Given these dynamics, the market for corrugated and boxboard paper is expected to continue its downward trend in prices.

Overall, while supply might tighten due to mill shutdowns, reduced demand from packaging plants and high inventory levels at paper mills are likely to drive a continued decrease in market prices for corrugated and boxboard paper.

Stainless Steel (304/2B 0.4MM) – Increase of 4.07%

The current performance and expectations for the stainless steel market next week:

• Profit and Supply Growth: Profits in the stainless steel market continue to evolve and may drive further increases in supply. However, since existing inventories have been substantially reduced, supply pressures are generally not significant at this time.
• Demand and Market Sentiment: There’s an optimistic outlook on demand, especially around the holiday period, with expectations for continued terminal replenishment. This anticipation helps maintain a positive market atmosphere.
• Raw Material Costs: Support from the cost of raw materials remains strong, likely contributing to rising costs in the production of stainless steel.
• Market Forecast: Taking all these factors into account, it is expected that the stainless steel market will show some strength next week, with the potential for price increases.

Overall, a combination of reduced inventory pressures, optimistic demand forecasts, and rising raw material costs sets the stage for a positive outlook in the stainless steel market in the near term.

Lithium-Ion Batteries – No change

How to combat rising costs?

Explore cost-reducing tips in this post: Rising Raw Material Prices: What Strategy To Follow? (6 Approaches).

What to do if your Chinese supplier suddenly tells you that material costs have risen: How To Cooperate With Your Chinese Supplier, Part 16: Bad News from China, Raw Material Prices Just Increased!

If your supplier just isn’t working out, maybe sourcing a new supplier will help you find one who can offer you better prices and more. If so, there’s no need to fear switching from your current supplier to a new one if you’re prepared: How To Switch To A Newer, Better Chinese Manufacturer? [eBook].

We hope this is helpful. Our mission at Sofeast is to help importers have transparency in their supply chain and to give them more control. And this information is critical to have some visibility into your manufacturer’s costing.

By the way, you can always contact us if you have any questions about whether a manufacturer’s quote is reasonable.