Here’s the monthly update from Sofeast’s sourcing team who has been 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 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 August 2023 and the price evolution over the past twelve months:
The graph below shows the cost fluctuation for the past year with the maximum, minimum, and averages for each of the materials.
Here is what our market analysts attribute these changes to during this past month:
Epoxy resin (epoxy refers to E-51) – cost increased 9.27%
The price of bisphenol A, a raw material for epoxy resin, remains high. The price of epichlorohydrin, another raw material for epoxy resin, is fluctuating weakly. As a result, the cost of epoxy resin is relatively stable. However, demand for epoxy resin from downstream industries is weak, and the market trading atmosphere is subdued. As a result, some resin factories have accumulated high levels of inventory.
ABS (AG-15E1) – cost decreased 1.29%
The ABS market has stabilized slightly higher this week. Upstream raw material prices are high, making it difficult for ABS manufacturers to reduce their costs. Some manufacturers have raised their ex-factory prices, which has led to a slight increase in market prices. However, the mainstream market is slow to follow suit.
Buyers are worried that prices will continue to rise, so sellers are reluctant to sell. Downstream factories are only buying what they need, so spot trading volume is low.
Silicone (110) – cost increased 1.90%
The domestic 110 raw rubber market price remained stable this week. Downstream rubber demand remained weak, with companies having insufficient orders and raw material inventories. As a result, the raw rubber trading atmosphere was not good this week, and the volume of new single transactions in the raw rubber market was low.
Zinc alloy (Zamak5) – cost increased 0.29%
The main reasons for the recent increase in the price of zinc alloy (Zamak 5) are as follows:
- Macroeconomic factors: The domestic central bank lowered the one-year LPR by 10 basis points, and the three departments (the People’s Bank of China, the Ministry of Finance, and the China Banking and Insurance Regulatory Commission) reasonably increased consumer credit support for automobiles, home appliances, and home products, and continued to optimize interest rates and fee levels. This has stimulated demand for zinc alloy.
- Supply-side factors: The domestic spot market supply has tightened. There is a shortage of spot zinc alloy in Tianjin and Shanghai, which has pushed up the premium. The market is bullish.
- Demand side factors: Downstream demand has remained basically unchanged. However, due to the tightening of spot supply, downstream buyers are more willing to stock up, which has driven up social inventory.
AL alloy (ADC 12) – cost increased 2.24%
The main reason why the price of bauxite moved up slightly in July is that the supply of both domestic and imported bauxite was tight.
PVC (SG-3) – cost increased 6.37%
The rise in the PVC market price this week was mainly due to follow-up factors and unexpected events. On the one hand, the strong performance of soda ash, glass, coking coal, and coke futures drove the Wenhua index to continue to rise.
PVC futures followed the rise, driving the spot price higher. On the other hand, the unexpected shutdown of Wuhai Zhonglian led to a further decrease in the calcium carbide supply. The unexpected rise in calcium carbide prices provided certain cost support to PVC.
Paper for color box (157G) – cost increased 3.76%
The main factors affecting the price trend of paper are:
- The supply of some brands in South China is still tight. Papermakers are reluctant to sell at low prices, and some dealers have continued to raise prices.
- The short maintenance of individual production lines within the week has reduced supply pressure. This is conducive to the strong paper price.
- The upstream pulp individual outer plate increased. This supports paper enterprises to continue to support the price operation.
Paper for cartons (AA 120G) – cost decreased 0.88%
The price of corrugated paper has increased due to the following factors:
- Paper mills have raised their factory prices. Large-scale paper mills have increased their factory prices by 30 yuan/ton, and some small and medium-sized paper mills have increased their prices by 30-50 yuan/ton. This has shifted the center of gravity of transactions.
- Terminal orders are gradually being released. Downstream packaging factories have seen a slight increase in orders, and the consumption of base paper has increased. This has created a stable trading atmosphere.
- The price of main raw paper has moved up. This is due to the transmission effect of upstream and downstream products. The rising cost has increased the support for the corrugated paper market.
Stainless steel (304/2B 0.04mm) – cost increased 2.85%
The stainless steel market rose steadily this week, with some prices falling. During the statistical period, stainless steel futures continued to rise, and nickel inner and outer futures were also mostly volatile. The overall support for stainless steel increased significantly. The stainless steel spot market had a strong overall willingness to rise, and the market price continued to rise under the guidance of some steel mills.
Battery (Lithium cobalt oxides) – cost decreased 9.47%
The lithium cobalt oxide market in China is consolidating in a narrow range. The support from upstream raw material costs is weak, and negotiations in the spot market are weak.
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.