Category Archive: Metals

Asia Manufacturing Showed Signs of Improvement in Q4-2022

ASIA MANUFACTURING COST DRIVERS REPORT

Q4– 2022 (Oct. Nov. Dec.)

Tracking The Trends Which Drive Costs in Asia Manufacturing

Executive Summary

Despite supply headwinds, labor shortages, and an uncertain economic environment, Asia manufacturing continues to surpass the expectations of recent years. Manufacturing has demonstrated continued strength in 2022, building on the momentum it gained emerging from the pandemic, and surpassing expectations from the prior two years. While overall demand and production capacity have hit recent highs, there are indications that the near-term outlook may not be as bright. Asia industry is currently experiencing concerns related to inflation and economic uncertainty. In addition, manufacturers continue to grapple with talent challenges that may limit their growth momentum. Moreover, supply chain issues including sourcing bottlenecks, global logistics backlogs, cost pressures, and cyberattacks will likely remain critical challenges in 2023. As leaders look beyond leading amid disruption and revamp their approach, our 2023 manufacturing industry outlook examines five important trends to consider for manufacturing playbooks in the year ahead.

The commodity price trends in the fourth quarter were mixed with plastics, fuel, freight and currency leading the down-in-price group, while rubber, steel, aluminum, other metals, and textiles led the up-in-price group.  Meanwhile paper, ceramic materials, and labor costs showed little change. Year over year, plastics, rubber, steel, aluminum, and freight ended the year lower in price than one year ago while metal, wood, paper, textiles, labor, and fuel all saw price increases in the period.

Below is a chart of the overall trends.  For all the details, please see the entire report below or download it from the link at the end.

Report Details 

PLASTICS & RUBBER

Overall, the General-Purpose plastic resin prices declined in Q4 of 2022 vs Q3 but only slightly.  And, in the most recent month of December the trend appears to have reserved with some price increases. Year over year, the results are mixed with PVC, HIPS, HDPE, and PET all showing price declines from 3% to 30%, while EVA, PS, PE and PE all showing increase of 4% to 11% versus one year ago.

Engineering grade resins displayed a similar trend in Q4 to the General-Purpose grades, with all grades except PU Foam showing price declines, however, they declined less than GP, most less than 1%. Year over year, prices were down on average by 4.5%, led by ABS down 21.8% and POM down17.5% while Nylon increased by 10.3% and Triton and Nylon prices increased slightly, by only about 1% versus 1 year ago.

Rubber prices were more mixed in Q4 with the trend generally up on average by about 1.9%. Reclaimed Rubber led the way up 2.6% while Polybutadiene Rubber led the decliners down 2.2%. Year over year, the trends were more mixed, with Neoprene and Nitrile up the most, 27.4% and 18.4% respectively, while Silicon, Natural Rubber, and Latex all showed substantial price declines of 35.7%, 11.5%, and 10.2% respectively versus one year ago.

METALS

For the fourth quarter of 2022, the prices for most of Carbon Steel grades were up slightly on average about 1% or less versus three months ago with Cold Roll Steel Sheet up the most at 1.7%. Year over year, virtually all carbon steel prices were down on the average 8.6% versus one year ago.

Stainless Steel prices were also up slightly in Q4, on average by 1%-2% compared with last quarter. Year over year, prices were mostly lower than 2021 with 430 and 201 grades down the most on average about 10% versus one year ago

Aluminum prices were higher in Q4, on average by 1%-2%, except 6061 which was up over 5%. Year over year, aluminum prices decreased on the average by 3.2%, however, 6061grade  was up 3.6% versus one year ago.

aluminum price trends,2022Q4

In other Industrial Metals, all showed substantial increases in price led by Nickel (up 18.7% and Brass rods, up 14.3%.  Only Zinc bucked the trend, down in price 3.9% versus Q3. Year over year, the prices trends were mixed with Nickel up 53.2%, Brass Rod up 4.8%, while Copper decreased 5.5% and Brass Tubes down 1.9% and Zinc Alloy prices were flat versus one year ago.

industrial metals price trends, 2022Q4

WOOD, PAPER & TEXTILES

Wood prices were flat in Q4 showing little change from Q3. Year over year, with MDF grades up 2% to 5%, Beech up 3.8, Fir up 1.3%, Pine up 1.0%, and White Oak up fractionally versus one year ago.

wood price trends, 2022Q4

Most all Paper prices were flat in Q4. Year over year, the trend was more mixed with Kraft down 0.7%, Corrugated down 9.5%, while White Cardboard was up 3.9%, Gray Cardboard was up 4.3% and Art Paper was up 0.8% versus one year ago.

paper price trends, 2022Q4

Most Textile fabric prices were up slightly in Q4 by about 1% versus last quarter. Only Raw cotton was down in price 3.7%. Year over year, the price trends were mixed with declines led by Raw Cotton down 32.9% and 100% Polyester Fabric down 9.1%, while Non-woven PP up the most at 6.2% followed by T/C fabric up 2.4%, and PVC fabric up on average by 1% versus one year ago.

textile fabrics price trends, 2022Q4

CERAMIC AND GLASS RAW MATERIALS

Ceramic and Glass Raw Materials showed little change over Q3. Year over year, most of the materials were up in price led by Soda Ash up 26.2%, Alumina up 2.3%, Glass Grade Sand and Feldspar up 2%, Kaolin up 1.3% and Quartz was flat versus one year ago.

ceramic and glass materials price trends, 2022Q4

FUEL

Fuel prices in China moved lower in the 4th quarter led by Diesel declining the most at 10.1%.  Year over year, the trend was higher prices for most fuels. up in prices on average 3.9% versus one year ago.

OCEAN FREIGHT

The World Container Index was down 55.7% versus last quarter. Year over year, the World Container Index was down 77% versus one year ago.

COST OF LABOR

Most of the Asian labor rates were unchanged in Dec. Year over year, Labor costs in China were up 4.5%, Vietnam up 5.9%, and Thailand by 5.4%, while Bangladesh labor costs declined 1.2% versus one year ago levels.

CURRENCY EXCHANGE RATE

For the fourth quarter, the USD strengthened against the CNY by 1.9%, however, the Yuan strengthened in December signaling a possible reversal in that trend. Year over year, the USD remained substantially stronger than most of the Asia currencies versus one year ago.

CHINA TRADE (Data lags by one month)

China Imports were up slightly by  almost 1% and China Exports increased 3.4% versus December. Year over year, China Imports decreased 7.3% and Exports decreased 10.1% versus one year ago.

The China Consumer Price Index (CPI) was up only slightly 0.2% and the China Producer Price Index (PPI) increased 0.6% in December. Year over year, the China CPI was up 0.3% and China PPI was down almost 10% versus one year ago.

PURCHASING MANAGERS INDEX (PMI)

The China PMI ended Q4 at 47.0, well below the benchmark 50 for an expanding economy and the Hong Kong PMI ended at 49.0, a little bit closer to the 50 mark. The US PMI also remained below 50, with the Manufacturing PMI at 46.2 in December, down from November’s 47.7, while the services PMI activity index fell to 44.4 in December (November: 46.2). Across the private sector, new orders fell at the sharpest pace since May 2020, while new export orders continued to fall, but at a slightly softer pace than in November. Both input and output price inflation eased in December, while employment growth was marginal and business sentiment was pessimistic by historical standards.

CONTACT US FOR MORE INFORMATION

Thank you for taking the time to follow trends in Asia manufacturing. Source International has operational offices in Louisville, Kentucky;  Xiamen, China; and Ho Chi Mihm, Vietnam. Our passion is to partner with companies in supply management from Asia. We have a 30+ year on-the-ground track record, a rigorous operating procedure, and a very well-trained local staff. We welcome the opportunity to show you how we can add value to your supply chain in Asia and invite you to visit our offices and website to learn more about us.

For additional details, please refer to the charts that follow or contact one of our Operations Specialists for more information. Thank you for your support.

You may download the entire report here.

Please visit our website at: www.sourceint.com

Data for this report comes from the sources listed and while every attempt is made to be as comprehensive and accurate as possible, please consider that these are just general trends, and you should not draw any specific conclusions from the data. We recommend that any information provided in this report be weighed against other sources and experts on the individual topics covered and\, accordingly, we make no specific claims nor assume any liability from the use of the data contained herein.

 

 

Sunless M1000 Spray Tanning System Case Study

 

Background: 
Following initial sales calls made in 2015 and subsequent discussions, the project to develop a new spray tanning product line was on track for 2020 development.  Then, of course, COVID hit!  However, thanks to Source International’s full Operations team on the ground in Asia, we were 100% ready to proceed as soon as we got the green light.case study
 

Action Plan

After several conference calls and sales visits, a team from Source including sales and senior leadership met with the customer’s management team on-site at their facility to dive into the project and develop the features, timelines, and expectations for their new spray tanning system.

A Source Customer Team was assembled in both the US and China office to review the customer’s existing products and to discuss how the ideas presented by the customer in preliminary meetings would be developed into the fully integrated spray tanning system with TUV certification. Budgets were created, timelines established, and the following list of desired features was developed:

  • HVLP Technology
  • Lightweight & Compact
  • Standard 100V Plug
  • Modern Appearance
  • Comfortable Hand Grip
  • Convenient Hanger on Sprayer
  • Adjustable Spray Pattern
  • Kink-free Hose
  • Ergonomic Carry Handle
  • Power Switch
  • Stable Foot Design
  • Stylish & Portable
  • Low Operating Noise
  • Removable Air Filter
  • Integrated Spray Gun Storage

 

Results:

After the initial product engineering was completed, Pre-Production Samples were made using various prototyping techniques and presented to the customer’s team where they were carefully reviewed by their senior management, sales, marketing, product management, engineering and supply chain teams to ensure they met the design and performance requirements.  Once the Pre-Production Prototypes had been fully tested, design changes were made, and several rounds of additional sample prototyping took place.  Following field testing of the final prototypes, customer approval of the M1000 Spray Tanning System was given, and the Source team began to build the tooling and set the final timing for production start-up.

After the multiple tooling was completed, Source engineers debugged them. It took several rounds of shots until the tooled Pre-Production sample was approved and the product was released into mass production for the first order.  These units were delivered to the customer’s warehouse in 2021.  After the second order, the company’s QA manager remarked, “Nice work! We inspected 10% of the second PO of 2000 ea. We found no leaks. Engineering is comfortable with the inspection and results.”

This project represented a true collaborative redesign effort involving the collective efforts of Source and the customer’s engineering, operations, factory, marketing, sales, operations, purchasing and executive teams all working together to accomplish this product development and offshore manufacturing success story.  This initial success led to the next series of sample units being sent to the Source China office for review and re-development to add the portfolio of products we will be producing for this customer.  See the product in action at this video link.

Source International’s dedicated professionals can achieve the same winning results for your OEM parts and products. For additional details regarding this success story, please contact our Midwest sales office at 440-546-0630 or our US Headquarters office at 502-589-7900.  Contact us today to arrange a no obligation assessment of how we can supply a partnership which adds value to your OEM products.

Precision Casting Parts

 

Source Delivers Precision Castings

 

Casting was one of the first industrial manufacturing processes dating back at least 7,000 years to China, India, and Pakistan. Throughout history, the casting process has been used to make tools, weapons, works of art, and other parts.

The modern casting process uses many different techniques and in all of them, liquid material is poured (or injected) into a hollow cavity of a desired geometrical shape and allowed to cool down to form a solidified part. The solidified part after it is extracted from the mold is known as a casting blank.

Precision Aluminum Extrusions

 

Source International – Aluminum Extrusion Products

Product Assembly Experts

 

Source International – Product Assembly Experts

Surface Finishing Processes

 

Source International – Surface Finishing Processes

Forged Products For Industry

 

Source International – Forged Products

Plastic Injection Molded Products

 

Source International – Plastic Injection Molded Products

Aluminum Extrusion Products

 

Source International – Aluminum Extrusion Products

Tube Rolling and Fabrication

 

Tube Rolling and Fabrication Was the First Source International Core Competency

Precision Die Casting Parts and Assemblies

 

At Source International Precision Die Casting is a Core Competency

Gear Hobbing and Shaping For Precision

 

Source International – Gear Hobbing / Shaping

 

Gear Hobbing, Milling and Shaping Is One Of Our Core Capabilities

Sheet Metal Stamping For Industry

 

Source International – Sheet Metal Stamping

 

Sheet Metal Stamping Is One Of Our Core Capabilities

CNC Machining To Meet Extra Tight Tolerances

 

Source International – CNC Machining

 

CNC Machining Is One Of Our Core Capabilities

Betting on China Manufacturing-Tesla’s journey

 

Tesla is doubling down on China Manfacturing

Opposite of what the market is doing, Elon Musk, true to his contrarian nature, is heading in the opposite direction and doubling down by heavily betting on China manufacturing.  His Shanghai Gigafactory 3 went online in record time last year and currently Tesla stock is said to be more valuable than the market capitalizations of all China’s listed carmakers combined.  Tesla is the sole owner of its Gigafactory 3 car plant in Shanghai and this is the first time that this has been allowed in China, previously requiring joint ventures with local partners. Combined with low cost land and government incentives including low-interest loans and subsidies, Tesla was able to drop prices and increase sales and manufacturing volumes.

Betting on China manufacturing

In a recent article in Week In China published by HSBC, the authors discuss the Tesla strategy betting on China manufacturing and its approach to sales and manufacturing. Tesla recently selected China’s Contemporary Amperex Technology (CATL) and South Korea’s LG Chem as new battery suppliers in an effort to diversify its sourcing chain beyond Panasonic and allowing it to retain all three of the leading EV battery makers in its supply chain.  They discuss a possible “cultural clash” emerging and Musk’s vision for upending 100 years of automotive tradition. And, as the EV companies battle over charging standards, a confrontation is likely to develop.  Further, the emergence of cobalt free batteries has the potential to lower the battery costs significantly.

All of this is intertwined with Tesla’s sales strategy in China and its Chinese competitors.  BYD, a Chinese battery-maker that morphed into a car firm (backed by Warren Buffett and South Korean giant Samsung), is one of China’s closer competitors to Tesla.  Similar to Tesla’s business model, BYD has branched out into solar panels and energy storage and an ambition to accelerate the world’s generation and storage of clean energy. Tesla is seen as a trendy pacesetter in China this year, despite the virus, accounting for nearly 1/3 of all electric vehicle sales in China in 2020 so far.

So, what about your company? Are you betting on China manufacturing? Could your Asia supply chain need a tune-up to compete in the “new world”?

Let our team of professionals show you how we can add value to your supply chain in these volatile times. Now, more than ever, you need someone on your team, looking out for your interests and controlling the hard to control offshore manufacturing situations.

Contact us today to get started on your “buy global – act local” supply chain strategy.

To learn more about Source International, visit our About Source page.

EXPERIENCE THE FUTURE OF MANUFACTURING AND PRODUCT DEVELOPMENT

 

FABTECH 2018 – Manufacturing and Product Development Expo

Experience the future of manufacturing and product development. Join us at FABTECH from November 6-8 at the Georgia World Congress Center in Atlanta where the metal forming, fabricating, welding and finishing community come together to see what’s new and what’s next. Source International will be giving a presentation on Smart Manufacturing Product Development Process: Get to Market Faster on Thursday, November 8, 2018 from 10:30 AM – 12:30 PM.

FABTECH is where connections are made and where deals get done. See cutting-edge exhibits, learn from expert-led education, network with peers and more,.Over 1,500 leading manufacturers all in one place with solutions aimed at increasing productivity and profitability. Bring your team to experience three action-packed days of hands–on demos, new product launches, education, and networking. Whatever you need to advance and move forward in manufacturing, you’ll find it at FABTECH.  With targeted technical, operational, economic and managerial sessions, you’ll discover the solutions you need to improve productivity and increase profits. Network with peers, learn from top industry experts, exchange best practices and explore the latest technology and advancements in the industry.

Contact us for more information and set up a meeting with us in Atlanta to learn how Source International’s supply programs can add value to your new product development efforts.

So register today using this 30% discount code and we look forward to seeing you at FABTECH 2018!

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