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 February 2023 and the price evolution since Jan ’21. Note the monthly cost change, in particular:
You can see a snapshot of the past few month’s cost evolution here – you’ll notice that cost trends 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:
This graph shows the cost evolution from early 2021 until the present day. You will notice the costs have stabilized over the past year.
In this next graph, we can see the individual material fluctuation over the same period of time.
Here is what market analysts attribute these changes to:
Epoxy resin (epoxy refers to E-51) – decreased 1.77%
The epoxy resin market is weaker this month. This month we saw a fluctuation in bisphenol A, which was minimal, the fluctuation of epichlorohydrin was narrow, and the cost of raw materials did not change much. Any positive news in the epoxy resin and raw material market is hard to find, industry confidence is at a current low with resin shipments not being as smooth as they could be. Some manufacturers are under inventory pressure and are being affected but narrow margins, they seem to be holding out for profit negotiation in any large orders.
ABS(AG-15E1) – decreased 3.60%
The ABS market had a relatively large decrease in February. With the high cost and high supply, the market is slightly stagnant. In order to obtain a deal, some producers still have a reduction in the factory price. Mainstream market trading is relatively flat, spot negotiations are focused on the small order and demand. Traders are hedging operations, the actual price reduction intention is strong but still needs to come to fruition.
Silicone (110) – increased 3.38%
The reason we are seeing the price rebound of silicone is mainly driven by the price increase of its raw material DMC. At present, the domestic and foreign trade demand of the downstream rubber market has not been significantly improved, and the raw rubber market is in a ‘general demand’ environment. The rubber manufacturers have covered positions in advance before and after the Spring Festival, therefore, we are currently seeing an inventory digestion stage.
Zinc alloy (Zamak5) – decreased 3.83%
With the increase in the supply of zinc ingots, the smelters’ raw material inventory is sufficient, however, zinc concentrate processing fees rose resulting in profit repair for the industry. The smelter operation enthusiasm is higher, zinc output is set to increase.
AL alloy (ADC 12) – increased 0.44%
Current domestic aluminum prices showed a weak trend in February, the main reason is that demand recovery is less than expected and inventory accumulation is dragging.
Paper for cartons (AA 120G) – decreased 4.48%
Raw material waste paper prices fell, and the cost of the fall aggravates a bearish market expectation. The release of most terminal orders is limited, superimposed import sources have arrived in Hong Kong, increasing market supply pressure, the market is in a pattern of oversupply, causing cautious bearish expectations.
Stainless steel (304/2B 0.04mm) – no change in price
The Stainless steel market fluctuated through the month but finished with no change in price. The market for trading is waiting to see what will happen with some traders testing the market on spot deals with others holding tight.
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.