We’ve been tracking the costs of China raw materials since early 2021 in order for importers to have a clearer idea of the market in China and allow you to plan ahead if prices for your essential materials seem to be on the up (for instance, you may decide to buy up some inventory in advance to insulate yourself from further rises).
Here’s the up-to-date material cost data from China for you as of late May 2022:
In May ’22, we’ve seen Li-ion battery costs starting to fall from their peak in March and April due to weaker demand which will give electronics manufacturers a little relief.
All material costs have either stayed stable or decreased a little, in particular, silicone which had been spiking is now more stable. ABS and Epoxy resin are two materials that are actually running at a slightly lower price than in January 2021. That being said, the majority of raw production materials from China are still around 30-40% more expensive than they were in early 2021 with batteries being the only serious outlier to that right now.
An expected spike in costs due to the war in Ukraine’s effect on oil and gas prices seemingly hasn’t materialized in China. China is largely unaffected by embargoes and tariffs on Russian resources as it doesn’t take part in them, therefore energy and material cost fluctuations experienced in Europe, for example, aren’t happening there.
We must also consider that many factories in Jiangsu, Shanghai, and some other areas are not working due to Covid lockdowns, which means the demand for raw materials is, in general, weaker than usual in China.
These factors help explain the arrest of the upward trend.
However, what will happen if/when all Chinese factories are active again? Prices will likely trend up again.
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.
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