Month: July 2024

Here’s the monthly update from Sofeast’s sourcing team, 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 you see here impact your bottom line!

Here’s the up-to-date material cost data from China for you as of late July 2024 and the price evolution over the past twelve months – this month zinc alloy, PVC, and lithium batteries all dropped by several percentage points of note.

Here you can see the individual cost evolution per material over the past year, including the weekly and monthly changes for July 2024 with costs in CNY:

Here is what our market analysts attribute these changes to during this past month:

Epoxy Resin E-51 increased by 1.09%

Epoxy resin prices and profits varied due to supply issues and cautious demand.

Key Factors Affecting Market Price Changes:

• Upstream Products: Prices increased overall because of tightening supply supporting higher prices.
• Intermediate Products: Slight price increase due to supply constraints and cost pressures.
• Downstream Products: Limited price changes due to flat demand from end-users and cautious purchasing behavior in the market.

Market Forces at Play:

• Supply-side pressure driving prices up in the upstream segment.
• Cost push-through affecting intermediate products.
• Demand stagnation in downstream markets.
• Overall market sentiment: cautious.

 

ABS (AG-15E1) decreased by 0.33%

The ABS plastic market is facing lower costs, less production, and weak demand, adjusting to tough conditions which could affect prices and future output.

Key Factors Affecting Market Price Changes:

• Cost: Upstream raw material prices have slightly decreased which has led to a continued easing of cost pressures on ABS production.
• Supply: Normal supply levels in most distribution areas and manufacturers have slightly reduced output this week.
• Demand: Downstream demand is weak.

Market Forces at Play:

• Cost pressures: Decreasing raw material costs are providing some relief to manufacturers which could potentially lead to more competitive pricing.
• Supply-side adjustments: Manufacturers are adapting to market conditions by slightly reducing output which might be an attempt to balance supply with weak demand.
• Demand weakness:Lack of strong demand from downstream industries is a significant factor and could be putting downward pressure on prices.

 

Silicone Rubber (110) decreased by 0.36%

Silicone prices might drop soon due to high production, rising inventories, and weak demand, with manufacturers trying to balance the market.

Key Factors Affecting Market Price Changes:

• Supply: Monomer production is operating at over 80% capacity. Inventory levels are increasing, suggesting potential oversupply.
• Market Sentiment: Downstream buyers are not actively purchasing and this lack of activity is impacting buying patterns and overall market mentality.
• Demand and Production: Silicone rubber and silicone oil markets are in their off-season so some companies are reducing production due to low demand.

Trend Prediction:

• Short-term outlook: The domestic DMC (Dimethyl Carbonate) market lacks significant news or developments. There is a risk of partial price declines in the short term. Overall price stability is expected but with downside risks.

Market Forces at Play:

• Supply-demand imbalance: High production rates vs. weak downstream demand are increasing inventory pressure.
• Seasonal factors: Current off-season for key silicone products affecting overall demand.
• Production adjustments: Some manufacturers reduce output to manage oversupply.

 

Zinc Alloy decreased by 4.07%

Zinc alloy supply is down because of maintenance, while demand is weak. Futures prices impact the market, which remains cautious with subdued activity expected.

Key Factors Affecting Current Market Price Changes:

• Supply: Increased smelter maintenance activities may lead to a potential reduction in spot supply and declining supply pressure.
• Demand: Currently in the off-season with weak operational demand.
• Market Sentiment: Falling futures prices and a generally declining market sentiment.
• Cost: Low processing fees and cost factors provide some price support.

Trend Prediction:

• Short-term outlook: Upward trend in futures prices during night trading. The spot market may show some recovery during the day. Market participants closely watch futures trends.
• Market activity: Expected general level of purchasing. Market turnover atmosphere likely to remain quiet.
• Spot prices: Intraday spot prices are expected to fluctuate.

Market Forces at Play:

• Supply-side adjustments: Maintenance activities reduce immediate supply which could potentially support prices.
• Seasonal demand weakness: Off-season affects overall demand and contributes to market quietness.
• Futures market influence: Significant impact on market sentiment and spot price expectations.
• Cost factors: Low processing fees provide a floor for prices.

 

Aluminum Alloy (ADC 12) decreased by 3.06%

Aluminum alloy prices are falling due to weak demand and economic issues. Buyers are cautious, indicating continued price drops in the near term.

Key Factors Affecting Current Market Price Trends:

• Macroeconomic Influences:
  • Bearish overall economic performance
  • Weak manufacturing data from Europe and the U.S.
  • U.S. political situation creating economic uncertainty
  • Limited positive measures from domestic meetings in China
  • Interest rate cuts by major banks showing limited impact
  • Insufficient market confidence
  • General decline in non-ferrous metal markets
• Supply-side Factors:
  • No significant disruptions in supply
  • Social inventory remains high compared to the same period last year
• Demand-side Factors:
  • Clear off-season characteristics
  • Lack of buying interest from downstream manufacturers despite price declines
  • Varied demand across sectors:
  – Cable industry: Relatively strong demand
  – Real estate: Declining construction starts
  – Automotive: Cooling production and sales
  – Photovoltaic modules: Increasing finished product inventory
  – Exports: Cooling trend

Market Forces at Play:

• Macroeconomic pressures: Global economic uncertainties weighing on market sentiment and limited effectiveness of domestic economic measures.
• Supply-demand imbalance: High inventory levels and weak seasonal demand across multiple sectors.
• Sector-specific challenges: Real estate and automotive slowdowns are particularly impactful.
• Export market weakness: Cooling exports add to demand-side pressures.

 

PVC (SG-3) decreased by 4.05%

PVC prices might keep falling due to increasing production and weak demand, with small fluctuations expected in the market.

Market Outlook for the near future:

• General Trends: Continued weakness in market fundamentals and an overall weak market atmosphere are expected.
• Price Prediction: The PVC powder market is likely to experience slight downward fluctuations.

Supply-side Factors:

• Production Recovery: Several manufacturers are resuming operations.
• Some facilities are starting maintenance, though.
• Overall Production Capacity: Despite the new maintenance, the industry’s overall starting load rate is expected to increase.

Market Forces at Play:

• Supply increase: Net increase in production capacity despite some maintenance which could put downward pressure on prices.
• Weak demand: Implied by the “continued weakness” in market fundamentals contributing to the overall weak market atmosphere.
• Balance between production recovery and new maintenance: Complex supply dynamics that could lead to market fluctuations.

 

Paper for cartons decreased by 2.17%

The paper carton market is weak but preparing for a peak season. Mixed pricing strategies and stable raw material costs may support prices despite current trends.

Key Factors Affecting the Market:

1. Paper Mill Pricing Policies:
   • Varied price adjustments across different locations and specifications:
   – Dongguan base: Price changes for some corrugated specifications
   – Liner Board: Price reductions for certain specifications
   – Tianjin and Shenyang bases: Price decreases
   – Some small and medium-sized paper mills: Narrow range price adjustments
2. Downstream Demand:
   • Packaging factory orders are generally weak
   • Low enthusiasm for base paper procurement
   • Limited overall market turnover
3. Waste Paper Market:
   • Average price of waste yellow board paper increased by 0.21% to 1,444 yuan/ton
   • Low recycling quantity at packaging stations
   • Limited market supply of waste yellow paperboard
4. Seasonal Factors:
   • Approaching peak demand season in Q4
   • Paper mills showing increased interest in stocking up
5. Recycled Fiber Pulp:
   • Prices in Southeast Asia remained stable

Market Forces at Play:

• Supply-side adjustments: Mixed pricing strategies by paper mills and some major companies raising purchase prices for raw materials.
• Demand weakness: Current low demand from packaging factories and anticipation of upcoming peak season.
• Raw material dynamics: Increasing waste paper prices providing some cost support and stable recycled fiber pulp prices in Southeast Asia.

 

Stainless Steel – Decreased by 0.61%

Stainless steel prices are under pressure due to weak demand and low cost support, with possible further declines expected.

Key Market Factors:

• Inventory Levels: Recent market inventory has been partially digested.
• Supply: Short-term support from maintenance activities continues and supply pressure may be somewhat alleviated.
• Demand: Off-season consumption impact persists and demand-side pressure remains significant.
• Sales Pressure: Increasing pressure at month-end.
• Cost Support: Continues to be weak.

Market Forces at Play:

• Supply-side factors: Maintenance activities providing some market support and reduced inventory levels potentially stabilizing prices.
• Demand-side challenges: Seasonal weakness in consumption and end-of-month sales targets creating additional pressure.
• Cost considerations: Weak cost support suggesting limited upward price potential.

Market Outlook:

• The stainless steel market is likely to continue operating under pressure next week and market prices may weaken to some extent.

 

Battery (Lithium Cobalt Oxides) Decreased by 6.17%

Iron phosphate for lithium batteries is stable but slightly weak, with balanced supply and demand. Stable raw material costs support prices, though low-cost supply may push them down.

Key Market Factors:

• Raw Material Costs: Temporarily stable this week and providing consistent cost support.
• Supply and Demand: The downstream replenishment rhythm is stable. Iron phosphate producers lack motivation to change production due to cost pressures and continued weak supply and demand in the sector.
• Spot Market: Increased low-cost supply within the current price range.

Market Forces at Play:

• Cost stability: Stable raw material prices maintain consistent production costs.
• Weak fundamentals: Ongoing weakness in supply and demand dynamics.
• Production decisions: Manufacturers are not adjusting production due to stable costs.
• Spot market dynamics: Increase in low-cost supply potentially putting downward pressure on prices.

 

How to combat 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].

 

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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.