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 December 2022 and the price evolution since Jan ’21. Note the monthly cost change, in particular:
You can see the overall cost evolution since Jan 21 here – you’ll notice that costs have stabilized, but many are running at a higher level now than when we started this monthly analysis; batteries, AL alloy, and PVC, to name three examples of this:
Here is what market analysts attribute these changes to:
Epoxy resin (epoxy refers to E-51) – decreased 6.77%
This week, the price of its raw materials fluctuated slightly downward, and the overall cost support was slightly weakened, but factories delivered more early orders, and there was no great shipping pressure, for the time being, so we do not see a huge change.
ABS(AG-15E1) – increased 0.41%
Buoyed by the release of partial pre-stock demand, this month producers temporarily had no sales pressure, and the actual factory price is stable with only a few small fluctuations.
Silicone (110) – decreased 4.32%
Manufacturers are entering the order delivery period and, because most manufacturers are optimistic about the pre-sale list, offers are relatively strong recently. Downstream rubber enterprises see more and move less, stock mentality tends to be cautious, and new orders have weakened.
Zinc alloy (Zamak5) – increased 2.11%
The main reasons for this small increase in cost are:
- On the supply side, smelter profits are optimistic and domestic zinc production remains high.
- On the demand side, the construction of downstream terminals has declined, and some plans will be delisted in advance in the near future. The negative impact of demand is amplified by the weakening of demand expectations.
- In terms of cost, the trend of European natural gas has turned downward, and the cost-side support has weakened in turn.
AL alloy (ADC 12) – increased 1.62%
Orders received by factories have fallen and the Aluminum enterprise profit expected this month is still hovering around the cost line.
PVC – increased 6.14%
This month’s largest increase is due to an increased load rate of the PVC industry at the supply end, local transportation improvement, and supply increases. On the other hand, PVC demand is gradually weakening. With the gradual increase of raw material inventory by terminal enterprises and the coming off-season, purchasing enthusiasm is weakening.
Stainless steel (304/2B 0.4MM)- increased 0.77%
Recently, the overall market trading atmosphere is cautious as the market continues to be impacted by China’s Covid epidemic, some market conditions continue to be affected, and demand concerns remain.
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.