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 June 2024 and the price evolution over the past twelve months – this month we’ve noticed that lithium battery, PVC, and ABS costs have dropped a little amid most materials being pretty stable.

china raw materials cost graph june 24Here you can see the individual cost evolution per material over the past year, including the weekly and monthly changes for June 2024 with costs in CNY:

china raw materials costs 2024 to juneHere is what our market analysts attribute these changes to during this past month:

Epoxy Resin E-51 increased by 0.38%

In June 2024, the cost of Epoxy Resin E-51 increased by 0.38%. Fluctuations influenced this price change in raw material costs and factory operational statuses. While some factories resumed normal operations after maintenance, the overall demand remained weak, which affected market confidence and the trading atmosphere.

Trends affecting costs

  • Raw Material Costs:
    • Bisphenol A experienced a slight increase in price.
    • Epichlorohydrin prices bottomed out.
    • Overall, epoxy resin cost support was slightly stronger.
  • Factory Operations:
    • Sporadic liquid epoxy resin factories restored normal operations post-maintenance.
    • Some equipment stopped for maintenance.
    • Solid epoxy resin production was stable but at medium to low levels.
    • Manufacturers had large spot inventories, ensuring sufficient supply.
  • Market Demand:
    • Downstream buying slightly improved due to the rise in bisphenol A prices.
    • The volume of new orders remained generally low.
    • Weak terminal demand suppressed future market confidence.
    • The market trading atmosphere remained light and subdued.

 

ABS (AG-15E1) decreased by 3.78%

In June 2024, the cost of ABS (AG-15E1) decreased by 3.78%. This decline was attributed to a combination of easing cost pressures for manufacturers, stable supply levels, and low downstream demand.

Trends affecting costs

  • Cost:
    • Upstream operational costs remained high, but pressure on ABS manufacturers eased.
  • Supply:
    • The market was well-supplied with ABS materials.
  • Demand:
    • Downstream operations maintained low positions.
    • Purchasing activity from downstream buyers was minimal, leading to low purchase volumes.

 

Silicone Rubber (110) increased by 0.21%

This month, the market price of 110 raw rubber, a key material for silicone production, remained stable. The stability was supported by an optimistic pre-sale outlook and moderate construction activity, leading to stronger supply-side support and decent downstream buying interest.

Trends affecting costs

    • Market Prices:
      • Prices of 110 raw rubber remained stable throughout the week.
    • Supply:
      • Stronger supply-side support due to an optimistic pre-sale list.
      • Overall construction load was not high, contributing to supply stability.
    • Demand:
      • Downstream inquiry and buying atmosphere were satisfactory.
      • Enterprises with spot supply and competitive pricing received more orders.
      • Increased performance in low-price transactions.

 

Zinc Alloy increased by 0.70%

The costs this month are subject to strong fluctuations, with a slight rise anticipated. This expectation was driven by declining supply pressures, weak demand due to the off-season, stable cost support from raw material shortages, and improved market sentiment.

Trends affecting costs

  • Supply:
    • Social inventory levels were decreasing, reducing supply pressure.
  • Demand:
    • Demand was weak as the off-season approached.
  • Cost:
    • Shortage of raw materials led to stable cost support.
    • Processing fees continued to decline.
  • Market Sentiment:
    • Futures prices increased.
    • Market sentiment showed signs of recovery.

 

Aluminum Alloy (ADC 12) decreased by 1.95%

The price of Aluminum Alloy (ADC 12) decreased by 1.95%. This change is influenced by both domestic and international economic factors. While supply is expected to increase, weak demand during the off-season and anticipated shifts in market dynamics contribute to the overall trend.

Trends affecting costs

  • Domestic and International Environment:
    • China’s domestic economic policies continue to promote consumption.
    • Expectations of a Federal Reserve rate cut in September (over 60% probability) are positive for aluminum prices.
  • Supply:
    • Inner Mongolia is expected to add 170,000 tons of net production capacity in the third quarter, leading to stable and increased supply.
  • Demand:
    • Weak demand is expected during the July-August off-season.
    • Demand may pick up in September during the peak season.
  • Price Projections:
    • Aluminum prices are expected to fall in August, averaging around 19,300 yuan/ton.
    • In September, prices are projected to rise, with an average of about 19,800 yuan/ton.

 

PVC (SG-3) decreased by 2.23%

PVC decreased by 2.23%. The decline was influenced by macroeconomic factors, supply adjustments, and weak domestic demand. While export activities showed some improvement, the overall market sentiment remained weak.

Trends affecting costs

  • Macroeconomic Factors:
    • Concentrated publication of macroeconomic data showed only marginal improvements.
    • Overall weakening of the commodity market atmosphere.
  • Supply:
    • Reduced maintenance activities led to an increase in industry load rates.
  • Demand:
    • Domestic demand was in the off-season, leading to decreased downstream orders.
    • Low price small purchases were common.
    • Improved export activities, particularly to India, with Formosa Plastics CIF India prices increasing by 150 USD/ton.
    • Increase in low-price export orders from production enterprises and traders.

 

Paper for color boxes increased by 0.02%

This month the price of paper for color boxes increased slightly by 0.02%. The market was influenced by continued support from paper mills, dealer behavior, and weak purchasing enthusiasm from the downstream industry. Despite a weak cost-side drive due to declining upstream slurry prices, the relatively high price level provided some support.

Trends affecting costs

  • Market Support:
    • Paper mills continued to support the market.
    • Shipments were relatively general.
  • Dealer Behavior:
    • Dealers prioritized orders, with some holding prices steady.
  • Downstream Purchasing:
    • Low purchasing enthusiasm from the downstream industry.
    • Individual instances of differentiated replenishment.
    • Some sought alternative sources of goods.
  • Cost-Side Factors:
    • Upstream slurry prices were weak and downward overall during the week.
    • Despite weak cost-side drive, the high price level still provided some support.

 

Paper for cartons increased by 0.58%

The price of paper for cartons has increased by 0.58% due to a combination of higher factory quotations from large paper mills, reduced procurement enthusiasm from packaging factories, and supply constraints in waste yellowboard paper.

Trends affecting costs

  • Increased Factory Quotations:
    • Major paper mills have raised their factory prices, influencing smaller mills to follow.
    • Transaction prices have generally moved upward.
  • Declining Procurement Enthusiasm:
    • Initial replenishment by downstream packaging factories was followed by a decline in procurement enthusiasm.
    • The trading atmosphere has weakened as a result.
  • Supply Constraints:
    • The market price of waste yellow board paper has increased, reversing the previous downward trend.
    • High temperatures and rainfall have reduced the recycling volume of waste yellowboard paper, lowering the overall supply.
    • This scarcity has driven up prices for downstream finished paper.
    • Some paper mills have resumed production and increased their purchasing of waste yellow board paper.
  • Market Response:
    • Leading paper enterprises have raised their procurement prices for waste yellowboard paper.
    • Surrounding mills have actively followed this trend.
    • The price of regenerated fiber pulp in Southeast Asia has remained stable.

 

Battery (Lithium Cobalt Oxides) Decreased by 5.71%

The price of lithium cobalt oxide for batteries has decreased by 5.71%, with expectations of continued weakness in the market due to weak cost support and low demand.

Trends Affecting Costs

  • Weak Cost Support:
    • Prices for cathode materials are expected to remain weak.
    • Lithium salts are anticipated to stay low.
    • Nickel salts are experiencing weak adjustments.
    • Cobalt salts are expected to continue falling from high levels.
    • Iron phosphate remains stable, contributing to weak overall cost support.
  • Low Demand:
    • Downstream new orders are insufficient.
    • There is no significant improvement in the fundamental performance of the market.
    • The spot market for positive materials continues to perform weakly.
  • Monitoring Raw Materials:
    • Close attention is being paid to the price changes of raw material lithium carbonate, which will influence market trends.

 

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.

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