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!
If it turns out that your supplier is charging you a lot more than the prices here, take it up with them and do some digging into why. If it isn’t justified then perhaps you can get them to reduce your costs.
Here’s the up-to-date material cost data from China for you as of late November 2022 and the price evolution since Jan ’21. Note the monthly cost change, in particular:
Here’s some analysis per material including why costs have changed since last month:
1. Epoxy resin (epoxy refers to E-51) – decreased 13.56%
The epoxy resin market has had some volatility. One of its raw materials, bisphenol A, fell in cost, while another, epichlorohydrin, rose a little. Cost support performance is weak, and the downstream and terminal demand performance continues to be depressed as well as many factories having inventory and abundance on the spot market. This has led manufacturers to reduce prices.
2. ABS(AG-15E1) – decreased 5.01%
ABS market prices fell this month. The cooling of spot replenishment demand combined with the decline of upstream raw material prices increased pressure on the seller’s shipments, and costs have duly decreased. Downstream factories tend to use as they go, carefully controlling raw material inventory. Supply is expected to increase and demand is weak. With the main market middlemen and downstream factories hedging operations, the flow of goods has slowed down, and the spot supply increased.
3. Silicone (110) – decreased 2.49%
This month, the domestic 110 silicone raw glue market fell somewhat. Some manufacturers received orders at a low price and the number of transactions was good. The prices of most domestic raw glue manufacturers fell, but because most of the large manufacturers finished placing orders and regional control inhibited demand, the overall transactional activity for raw glue became weaker, affecting its price.
In terms of raw materials: this week, Shandong, Guangdong and other downstream main production areas were affected by regional control, production cuts and parking increased, and terminal demand further shrank. Meanwhile, local logistics was also restricted. and the flow resistance of DMC goods increased. The overall market atmosphere is average.
4. Zinc alloy (Zamak5) – decreased 3.39%
The domestic coating market price has risen the most. As the weather gradually turns colder, terminal demand continues to show signs of tightening, and the intermediate inventory replenishment demand will continue to replace terminal purchasing as a new focus. In terms of raw materials, the recent overhaul of raw materials enterprises fluctuated little, and the supply side maintained a relatively stable situation. The capital market has a certain level of continued consolidation of the situation, in the short term it will be close to the normal level. Further changes in the capital markets may affect the physical market in future and we’ll keep an eye on this and let you know.
5. AL alloy (ADC 12) – increased 0.31%
Aluminum prices continue to rise. The main reason is still the tightening of supply. In terms of supply, recently, the traffic in Henan and other regions was not smooth causing difficulty with logistics. Arrival volume in East China and other regions is still low, inventory continues to be removed, and the supply may continue to tighten in the coming months which could lead to further price increases.
In terms of demand, recent terminal consumption may still remain weak, processing plant orders are not good, market demand remains weak, and there is limited support for aluminum prices.
6. PVC – decreased 2.40%
The PVC market had a whole range of shocks this month and prices have fluctuated. For instance, calcium carbide PVC’s average price wass 5950 yuan/ton, 85 yuan/ton down on last week. Low transportation efficiency led to a decrease in market arrivals and a continued decline in inventory, the load rate of the PVC industry slightly increased and terminal demand remained normal. Overall, there was no obvious drive from the fundamentals.
7. Paper for color boxes – decreased 1.13%
The coated paper market in China has been loose. 157g coated paper’s average price of 5698 yuan/ton is down 0.56% month on month and continues to fall.
The main factors affecting the price trend are as follows: first, the paper enterprise price is mainly stable and inventory pressure still exists. Second, shipments from downstream dealers (especially in Southern China) are weak, and there are signs of weak market confidence. Third, a lack of support from social demand. Fourth, the high price of pulp.
8. Paper for Cartons (AA high tile 120G) – decreased 3.06%
Most paper mills have been operating as normal. The cost from large-scale paper mills in the Dongguan Base was lowered by 30 yuan/ton, and individual paper mills adjusted their costs accordingly. Secondly, the cost of the raw material waste paper is stable. Finally, at present, delivery is not smooth in many places, the operation of some downstream packaging plants is also limited, the demand for base paper is limited, purchasing has been stable, and market trading has not reduced.
9. Stainless steel (304/2B 0.4MM) – decreased 4.38%
The stainless steel market has been a little weak. Stainless steel futures fell after a recent rebound and the spot market’s wait-and-see atmosphere is strong.
End-user demand continues to be cautious which drags down the market demand.
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.