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 June 2023 and the price evolution over the past twelve months:
This graph shows the cost evolution for one year and as you can see, the costs are stable across all materials, except for batteries, where the cost has reduced drastically over the past 12 months.
The graph below is showing the cost fluctuation for the past year with the maximum, minimum, and averages for each of the materials.
Here is what market analysts attribute these changes to:
Epoxy resin (epoxy refers to E-51) – decrease 10.75%
The price of bisphenol A, a key raw material for resin, stabilized and then increased during the week. The price of epichlorohydrin, another raw material for resin, stabilized after a decline. This significant cost support boosted the morale of production enterprises.
At the beginning of the week, Zhejiang Petrochemical’s multi-round auction for bisphenol A boosted the sentiment of upstream bisphenol A factories, resulting in a narrow-range price increase for raw materials. This led to some resin downstream players entering the market to replenish their supplies, which slightly improved the atmosphere of market negotiations and trading.
Several factories received orders throughout the week, with the new order offers showing a limited range. However, as the holiday approached (dragon boat festival), the downstream demand for replenishment diminished, causing a weakening in the Epoxy resin market’s trading atmosphere.
ABS (AG-15E1) – decreased 1.49%
The ABS market has been stable recently, with some signs of firming. Although upstream raw materials are weak and low, the availability of ABS spot resources is limited. Those who hold these resources have maintained a stable mindset, leading to relatively strong prices in the mainstream market. However, transactions have been slightly flat due to a cooling demand for phased replenishment. As a result, the ABS market in the short term may see a consolidation period characterized by a wait-and-see approach.
Silicone (110) – decreased 7.10%
The domestic 110 raw rubber market has been relatively stable this week, with some localized declines. The main factory inventory pressure remains high, keeping the price level low at 14,000 yuan/ton. However, this price is below the cost price for most manufacturers, making it difficult for them to reduce their prices further. As a result, many manufacturers have reduced production and operations. Offers have been made in the range of 14,500 to 15,000 yuan/ton (including packaging), but transactions have been limited. Downstream demand for rubber remains weak, with buyers only purchasing what they need immediately. As of Wednesday, the prevailing mainstream trading range in the domestic 110 raw rubber market is 13,800 to 14,000 yuan/ton (including packaging).
Zinc alloy (Zamak5) – decreased 0.60%
Market sentiment regarding shipments is positive, as downstream buyers are maintaining their just-in-time requirements. However, traders are struggling to facilitate smooth shipments due to lower prices. Even with lower prices, demand remains weak, making it difficult to generate transactions through price adjustments. As a result, the overall market is sluggish.
AL alloy (ADC 12) – decreased 1.28%
The domestic spot market is characterized by a persistent high spot price premium. The South China region is reluctant to sell, while other regions are more willing to ship goods. Overall, the market is willing to receive goods, and the trading atmosphere is generally neutral.
PVC (SG-3) – decreased 1.79%
The market trend this week has been influenced by several key factors. On the supply side, there has been a low load rate, leading to inventory accumulation. On the demand side, demand has been weak, and transactions have been lackluster. This has resulted in a poor performance for the market overall.
However, there are some positive signs. Commodities have seen a slight increase due to positive expectations regarding macroeconomic conditions. Additionally, calcium carbide prices have risen modestly, while caustic soda prices have declined. This is due to increased integration cost support.
Overall, the market trend this week is mixed. There are some positive signs, but there are also some challenges that need to be addressed. It will be interesting to see how the market develops in the coming weeks.
Paper for color boxes (157g) – increased 5.56%
The price trend this week has been influenced by several main factors.
- Paper mills: Paper mills have not adjusted their offers this week, primarily due to fulfilling publishing orders. Additionally, some production lines in East China have ceased operations and switched to other production types. However, enterprise inventories remain high, and the supply side continues to be loose.
- Downstream dealers: Downstream dealers are generally shipping goods, but the issue of production and sales imbalance still persists.
- Social demand: Social demand has increased slightly, but this has not led to a boost in market confidence.
Overall, the price trend this week is mixed. There are some signs of support from the supply side, but the demand side remains weak. It will be interesting to see how the market develops in the coming weeks.
Paper for cartons (AA 120G) – increased 3.74%
Currently, the selling price is higher than the market price, while some buying prices show slight deviations from the market price. However, the majority of customers generally fall within the market price range.
Stainless steel (304/2B 0.04mm) – increased 0.89%
At the start of the week, nickel inner and outer futures continued to rise, maintaining a positive market atmosphere. However, the stainless steel spot market underwent substantial adjustments, primarily driven by strong selling pressure. This caused stainless steel futures to decline significantly, which in turn shifted nickel inner and outer futures toward a downward adjustment trend.
Consequently, concerns grew within the stainless steel spot market, leading to an increase in low-cost shipments. This further intensified the pressure on the overall market atmosphere. As a result, market prices witnessed varying degrees of decline, influenced by the reduction in guidance prices by certain steel mills.
Battery (Lithium cobalt oxides) – increased 12.61%
The national lithium cobalt acid market is currently undergoing a process of price range sorting. The upstream cobalt salt segment has remained stable and strong in recent times, while the lithium salt segment has shown signs of weakness and a downward trend.
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.