Here’s the monthly update from Sofeast’s sourcing team who has been tracking the costs of commonly used raw materials from China since January 2021 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 that you see here do have an impact on your bottom line!
Here’s the up-to-date material cost data from China for you as of late April 2023 and the price evolution since Jan ’21. Note the monthly cost change, in particular:
This graph shows the cost evolution from early 2021 until the present day. You will notice the costs have stabilized over the past year.
Here is what market analysts attribute these changes to:
Epoxy resin (epoxy refers to E-51) – decreased 0.52%
The cost of raw materials, including bisphenol A, continuous firm, and epichlorohydrin, is expected to support stronger performance in the market. However, the downstream industry has not seen any significant improvements in orders, and buyers are approaching their purchases with caution. They are mainly replenishing only what is necessary, resulting in low enthusiasm for market trading. As we approach the end of the month, companies are focusing on demand in the wind industry and may expect a slight improvement.
ABS (AG-15E1) – decreased 2.77%
With the release of new production capacity, the market supply has increased, resulting in increased competition between brands. This has caused some resistance to shipments among middle and high-end brands, leading to a drop in market prices within the week. Chemical commodities have experienced fluctuations, with prices rising and falling repeatedly. The cost boost has been slightly weak, causing the ABS market to adopt a cautious wait-and-see approach.
Silicone (110) – decreased 8.30%
This week, the domestic market offer remained mostly stable due to the stabilization of raw material DMC price. However, the downstream rubber market continues to experience weak demand due to its own order shortages. As a result, the enthusiasm for raw material rubber procurement is not high, leading to a cold trading atmosphere in the domestic rubber market within the week. Although some large transactions have occurred, the prices have slightly loosened.
Zinc alloy (Zamak5) – decreased 6.05%
The market macro sentiment was weak primarily due to a fall in futures prices, resulting in a negative impact on zinc prices. However, traders’ shipment sentiment remained relatively stable. Market transactions were mainly driven by downstream stockpiling before the holiday, leading to a slight improvement in traders’ shipment performance despite the fall in zinc prices.
AL alloy (ADC 12) – decreased 1.54%
On Tuesday, major stock indexes in the United States experienced a decline as risk aversion increased due to the lingering effects of the banking crisis. Several giants such as McDonald’s reported poor results, and banks including Daikyo Bank and UBS experienced plunging profits and deposits. Despite the fall in crude oil prices, which wiped out some of their early rebound, the U.S. dollar index ended the session in positive territory. Meanwhile, gold prices continued to fluctuate around their highs for the year.
PVC (SG-3) – decreased 3.78%
The calcium carbide market is expected to experience weak supply and demand next week due to low calcium carbide construction. Although PVC powder enterprises are undergoing centralized maintenance, we must pay attention to the impact of supporting calcium carbide export on the market. However, the overall supply level of calcium carbide is not high, so its impact on the market is expected to be limited. It is possible that some purchase prices may fall, but the rest of the prices are likely to continue to remain low and stable. Moving forward, we should monitor whether there will be a temporary shortage of calcium carbide supply due to a mismatch between supply and demand.
Paper for color boxes (157g) – increased 2.03%
First, paper enterprises have remained stable within the week. Dealers have experienced poor single effects due to their focus on making profits, resulting in a wait-and-see mentality. Second, upstream pulp prices continue to remain weak, thereby continuing to put potential pressure on the cost end. Third, publishing bidding orders have continued to be released throughout the week, providing slight support to the industry’s mentality.
Paper for cartons (AA 120G) – decreased 0.50%
To begin with, many large-scale paper mills have increased the ex-factory price of certain specifications by 30-50 yuan/ton, but paper mills in the region have been less willing to follow suit, resulting in a slowed growth rate. Secondly, the price of waste paper, the primary raw material, has fallen, leading to a weaker rise due to the transmission effect of upstream and downstream products. Finally, the volume of terminal orders is average, and downstream packaging plants mainly consume base paper inventory, resulting in a weak trading atmosphere.
Stainless steel (304/2B 0.04mm) – decreased 4.89%
In summary, there has been a significant increase in the overall supply digestion in the recent market, resulting in a warm trading atmosphere. The rise in cost support, coupled with an optimistic market order before the May Day holiday, has further strengthened the market support. If there is no further news impact, it is expected that the stainless steel market will maintain a certain trend next week.
Battery (Lithium cobalt oxides) – decreased 30.89%
In the short term, despite the positive performance of materials upstream and downstream, the product prices of positive materials are expected to follow the decline in raw material prices.
How to combat the 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.