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 February 2024 and the price evolution over the past twelve months:
Here you can see the individual cost evolution per material over the past year, including the weekly and monthly change for February 2024:
Here is what our market analysts attribute these changes to during this past month:
Epoxy Resin (E-51) – no change 0.00%
Supply: The liquid resin factory lacks a proper maintenance plan. Additionally, some factories have excessive finished product inventory, experiencing increased shipping pressure. This situation is compounded by the expectation of an oversupply in the market next week.
Demand: While some small and medium-sized customers haven’t returned to the market yet, larger customers have sufficient inventory to last them throughout the week. Next week, it will be crucial to monitor the purchasing enthusiasm of small and medium-sized businesses, as overall demand expectations are currently considered average.
Raw Materials: According to Zhuo Chuang Capital News, the price of bisphenol A, a key raw material, is expected to remain either steady or slightly decrease next week. Epichlorohydrin, another critical raw material, is also expected to experience narrow-range consolidation. Overall, these trends indicate a potential weakening in the cost of spot raw materials.
ABS AG-15E1 – increased 3.71%
Supply: While new ABS manufacturers have entered the market, or existing ones have slightly increased production, Jihua Jieyang’s upcoming maintenance in March will limit overall production growth. Nevertheless, most manufacturers hold sufficient inventory, preventing significant price increases.
Demand: Downstream demand, though recovering, is experiencing a slow pace. This recovery offers some price support, but its strength is insufficient to drive significant gains.
Raw Materials: Upstream raw materials show mixed signals. Styrene is expected to remain stable and potentially strengthen, acrylonitrile is anticipated to fluctuate within a narrow range, while butadiene is predicted to maintain its strong upward trend. These cost increases, particularly in butadiene, are expected to provide further support to ABS prices.
Overall: The fundamentals of the ABS market have the potential to improve after the holidays. However, the speed at which accumulated inventory is depleted remains uncertain. Despite cost pressures offering some confidence to market participants, the short-term outlook for the ABS market is likely to remain mixed with the potential for consolidation after an initial rise in prices.
Silicone (110) – increased 8.96%
Domestic 110 raw rubber prices saw an increase this week. This rise can be attributed to two key factors:
Rising Costs: Following the holiday period, raw material DMC (dichloromethane) experienced a moderate price rebound, leading to stronger cost support for rubber production.
Shifting Supply and Demand: Second-leading enterprises have accumulated pre-sale orders, contributing to a decrease in readily available spot rubber after the holidays. This coincides with a reduction in spot supply capacity due to the limited construction of new rubber production equipment and temporary closure adjustments implemented by some producers. Additionally, downstream rubber mixing enterprises have unfulfilled orders from the pre-holiday period, leading to increased production enthusiasm after the festival. This improved demand, coupled with a tighter supply, has contributed to the price increase in the domestic 110 raw rubber market.
Zinc alloy (Zamak5) – decreased 3.07%
Spot zinc prices have risen, largely driven by higher futures prices. While traders in the spot market exhibit positive sentiment regarding shipments, the increase in zinc prices has led to a decline in market demand. Downstream consumers are hesitant to purchase due to fear of high prices, resulting in weak transaction activity in the market.
AL alloy ADC 12 – decreased 0.51%
Domestically, the spot market for zinc is experiencing sluggish activity. While deliveries are proceeding smoothly and traders are receiving goods in good condition, demand from downstream processing plants hasn’t shown a significant increase. This results in a generally neutral trading atmosphere.
The premium for near-month contracts compared to the benchmark price has shifted compared to the previous trading day. Currently, the premium in East China is around 30 yuan/ton, while it’s roughly 10 yuan/ton in South China.
PVC (SG-3) – decreased 0.39%
Transportation: Initially, the flow of calcium carbide recovered after the Spring Festival holiday, as drivers returned to work and high-speed transportation resumed. However, late-week snowstorms disrupted transportation, leading to lower shipments and downstream arrivals.
Supply: The startup performance of calcium carbide producers varied by region. In Inner Mongolia, most plants resumed operations, though output slightly declined towards the end of the week due to factors like high production pressures, energy costs, and poor shipments. In Ningxia, some producers have reduced or maintained low production levels since the Spring Festival.
Demand: Downstream PVC producers experienced inconsistent arrivals. Before the transportation resumption, the number of vehicles awaiting unloading increased, likely due to the pre-holiday price drop. However, demand transitioned to a wait-and-see approach this week. Later in the week, the snow further impacted arrivals, causing the number of unloading vehicles to decline and increasing market caution. While PVC enterprises have seen some adjustments in operating rates throughout the period, these haven’t significantly impacted prices.
Paper for color box (157g) – increased 1.72%
The double copper paper market saw a slow recovery this week, with paper prices remaining stable. According to Zhuo Chuang Information data, the average market price of 157g double copper paper remained unchanged at 5740 yuan/ton compared to the pre-holiday week. This stability is attributed to consistent paper mill offers that bolstered industry confidence. However, the staggered return of downstream dealers and printers has limited the overall market recovery so far.
Paper for carton (AA120G) – increased 1.31%
Following the Spring Festival holiday, the paper market recovery has been slow, as demand lags behind supply. This limited overall trading activity. Additionally, some major paper mills have postponed their price increase plans, fostering a wait-and-see approach in the market.
Furthermore, the price of waste yellow-board paper, a key raw material, has decreased slightly. This week’s average price of 1523 yuan/ton represents a 0.13% decline compared to the pre-holiday period, narrowing the downward trend from the previous week. This price movement reflects the slow return of packaging stations after the holidays, leading paper mills to rely on their existing waste paper inventory and showing limited interest in adjusting purchase prices. Consequently, overall trading volume in this segment remains weak.
On the other hand, the increased supply of recycled fiber pulp in Southeast Asia, coupled with the recent price rise of waste paper in the United States, provides some support for the cost side of paper production. However, due to the delayed impact of upstream and downstream price movements, this support is currently limited.
Stainless steel (304/2B 0.4MM) – increased 0.65%
The recent impact of rain and snow on logistics is diminishing, leading to expectations of a gradual rebound in market activity. However, current inventory levels across the market are uneven. While some contract households hold high inventories, other base packaging factories experience the opposite. Additionally, some of this inventory represents high-cost stock, further hindering market enthusiasm for shipments.
Despite these challenges, positive signs are emerging. Increased trading activity in related products like nickel-iron and ferrochrome indicates a potential rise in the waste stainless steel economy. This market support suggests a continuation of strength in the waste stainless steel market next week.
Battery (lithium cobalt oxides) – no change 0.00%
– – – – –
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.
Leave a Reply