It’s the end of the month again so that means it’s time for Sofeast’s sourcing team to give you an up-to-date picture of the costs of China raw materials. We track these costs each month to help you understand if your suppliers here are charging you a fair price or not.
Being regularly informed allows you to plan ahead if prices for your essential materials seem to be increasing (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 October 2022 and the price evolution since Jan ’21. Note the monthly cost change, in particular:
We also provide general commentary below, so you are aware of what market participants tend to say about the situation for each of these materials.
1. Epoxy resin (epoxy refers to E-51) – decreased 1%
The main reasons for this small decrease in cost are that the start-up load of epoxy resin manufacturers is more stable, and the spot market has a sufficient supply. Downstream gas purchasing is weak and enthusiasm for replenishing is poor. Epoxy’s raw material epoxy chloropropane has fallen in a narrow range and cost support for it has weakened.
2. ABS – decreased 5.02%
ABS market prices fell a reasonable amount. Some reasons are that the gas spot price has decreased and there is an increasingly loose supply and the upstream styrene market has declined and market focus continues to fall. Sale pressure for some manufacturers and traders rose near the end of the month. The downstream plant game intention is low, hedging operation is the main. This week, although the price decline has narrowed, but manufacturers continue to accumulate.
3. Silicone (110) – decreased 8.99%
Silicone prices have dropped fairly significantly this month due to poor downstream demand of the compound rubber market. Customers aren’t buying as much, so raw rubber inventory is increasing. Rather than store even more inventory, silicone prices have dropped accordingly.
4. Zinc alloy (Zamak 5) – decreased 1.81%
Not a great change here, mainly because firstly on the supply side, the domestic zinc mine supply is sufficient, and the profit margin of zinc smelters is improved.
Secondly, on the demand side, the downstream demand is weak, which continues to act as a restraining factor for zinc prices.
Thirdly, on the macro side, the risk of economic inflation still exists, but its pressure has eased. The market has nearly digested the news that the Federal Reserve will continue to raise interest rates by 75 basis points in November, and its mood has improved slightly.
5. AL alloy ADC 12 – increased 0.52%
Recently, aluminum prices have continued to decline overall.
First, demand, processing plant orders are still not good and market demand is still weak.
Second, in terms of supply, although there has been a reduction and transportation has been affected to a certain extent during October (national holiday), there are certain difficulties in the shipment of goods, but the overall impact is limited, slightly driving the aluminum price upwards.
6. PVC – decreased 7.10%
Quite a big monthly decrease in PVC costs partly because of weak supply and demand, but mainly due to delivery delays. Buyers are waiting to see before making moves in the market.
7. Paper for Carton – decreased 0.72%
First of all, the ex-factory quotation of some large-scale paper factories has been reduced by 50 yuan/ton, and some small and medium-sized paper factories have also adjusted in a narrow range according to their own shipment situation.
Secondly, the price of raw material waste paper is mostly stable.
Finally, there is no significant volume of e-commerce orders, and downstream packaging factory orders are stable.
8. Paper for color boxes – increased 0.86%
A slight increase is down to the high price of paper enterprises, downstream dealers only doing limited trading and some prices being narrow upstream. Also, publishing orders are more prominent while social demand is limited, and pulp prices are still high and the cost side has certain support.
9. Stainless steel (304/2B 0.4MM) – increased 4.90%
The stainless steel market was boosted with downstream and terminal replenishment after the October festival in China to drive forward the market supply of goods leading to a slight increase in costs.
10. Batteries (Lithium cobalt oxides) – No change in price
How to combat the rising costs?
If you’re suffering from increasing material costs it may be hard to avoid them, but finding other ways to reduce costs across your business is always smart so check out these resources.
Listen to some helpful tips cost-cutting tips for importers with manufacturing in Asia in this podcast episode from October ’22: 9 Cost-Cutting Measures Importers Will Love! [Podcast]
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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