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  1. ASIA MANUFACTURING COST DRIVERS REPORT Q1– 2023 (Jan. Feb. Mar.)

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    ASIA MANUFACTURING COST DRIVERS REPORT

    Q1– 2023 (Jan. Feb. Mar.)

    Tracking The Trends That Drive Costs in Asian Manufacturing

    Executive Summary

    With the lifting of most of the world-side pandemic restrictions by 2023, Asia manufacturing continues to stabilize and rebound but at a slower pace than in the past. The emergence of a new wave of challenges facing Asia supply chains include geopolitical crisis’s such as the Russia-Ukraine conflict and rising China-US tensions, inflation, and a focus by western buyers on near-shoring, sustainability, and diversity initiatives.

    Rising inflation has started to spur debates and is projected to rise further in 2023, due in part to pent-up demand following the world-wide economic reopening. Slower retail sales, however, following the Christmas holidays have caused some bloated inventories and dampened manufacturing demand. Sustainability and climate change are having a tangible impact on raw materials and business operations as manufacturers become more proactive in terms of introducing environmentally friendly products or processes. In addition, automation has accelerated to offset the impact of rising wages, lower labor availability, and increased governmental regulations for workers.

    The commodity price trends in the first quarter of 2023 were mostly positive with most grades of plastics, rubber, stainless steel, aluminum, wood, paper, fuel, and freight decreasing in price along with a continued strong dollar. The commodities showing increases in the first quarter include carbon steel, other industrial metals, textiles, and ceramic/glass raw materials which led the up-in-price group. Meanwhile labor costs were most stable showing little change in the quarter. Year over year, plastics, rubber, steel, aluminum, metals, fuel, textiles, and freight ended the year lower in price versus one year ago while ceramics/glass raw materials, and labor ended the year higher in price. Only wood saw little change year over year.

    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, General Purpose plastic resin prices declined on average by almost 5% versus Q4 led by PP, PE, and EVA all down over 8%.  Year over year, virtually all GP plastic prices are lower on average by almost 11% versus one year ago led by PVC and PP which declined the most­­­­.

    Engineering grade resins displayed a similar trend in Q1 to the GP grades, with all grades except POM and PU Foam showing price declines averaging about 5%. Year over year, prices were down on average by 9%, led by ABS down 24.8%, PC down 20.2% and POM down 15.4% while only Nylon PA6 increased by 1.7% versus 1 year ago.

    Rubber prices were also down in Q1 on average by about 4%. EPDM, Latex, and Polybutadiene Rubber led the way down 12.5%, 8.3%, and 7.5% respectively while Natural Rubber and Reclaimed Rubber were up in price 5.7% and 1.5% respectively. Year over year, the trends were similar, with Silicon down 28.3%, EPDM down 15.8%, Latex down 12.0%, and Polybutadiene Rubber down 11.4%, while Reclaimed Rubber was up 4.2% and Nitrile was up 1.4% versus one year ago.

    asia manufacturing cost drivers report, Q1 2023

    METALS

    For the first quarter of 2023, the prices for most grades of Carbon Steel were up slightly on average by about 1.5%. Cold Roll Steel Sheet was up 4.5%, Hot Rolled Steel Plate and steels poles were both up 8%, and Steel Wire was up 4% while Pig Iron was down by 2.8%. Year over year, most of carbon steels in prices were down on the average 10.5% versus one year ago.

    asia manufacturing cost drivers report, Q1 2023

    Stainless steel prices were down on average by about 5% in the first quarter led by 430 down almost 13%, and 202 down 10%. Year over year, stainless is down on average by 17% with 430 down 18.9%, 304 down 21.9%, 410 down 11.5%, 201 down 14.4%, and 420 down 15.6% versus one year ago.

    asia manufacturing cost drivers report, Q1 2023

    Aluminum prices were down on the average about 1.5% in Q1, however, the trend appeared to reverse itself as prices began to creep up in March. Year over year, all aluminum prices decreased on the average 14.85%. A00 was down 17.6%, 1060 was down 15.5%, 3003 was down 13.9% , 6061 was down 14.2% and A380 was down 13.6%.

    asia manufacturing cost drivers report, Q1 2023

    In other Industrial Metals, Q1 saw Nickel down in price by 17.5% and Zinc down by 4.5% while the trend for Brass and Copper were both up in price around 5% each.  Year over year, Zinc prices were lower by 13.8%, Nickel decreased 13.7% Copper decreased 6% and, Brass prices were mostly unchanged versus one year ago.

    asia manufacturing cost drivers report, Q1 2023

    WOOD & PAPER

    Wood prices saw little change in the first quarter, down on average by less than 1%. Similarly, year over year, Medium Density Fiberboard was down in price only slightly 1%, Fir, White Oak and Pine were unchanged, while Beech wood was up slight 1% higher versus one year ago.

    WOOD

    Paper prices were down on average by about 8% ­­in Q1 led by corrugated board down almost 21%, white and gray cardboard down around 10% and kraft and art paper down about 1%. Year over year, the trends are similar with corrugated down almost 23%, white cardboard down 6.5%, gray cardboard down 5% and art paper down almost 2% while kraft prices were relatively the same versus one year ago.

    CERAMIC AND GLASS RAW MATERIALS

    Ceramic and Glass raw materials trended up slightly in the first quarter by about 0.5% led by Feldspar up almost 3% and Quartz up almost 2%. Year over year, the trend is similar with Feldspar was up 3.9%, Kaolin was up 2.1%, Quartz was up 1.9% Alumina was down 1%, Glaze was up fractionally. Soda Ash was up by 7.1% and Glass Grade Sand was up 1.4% versus one year ago.

    FUEL

    Fuel prices trended down in the first quarter by about 1%.  Year over year, the trend for the grades were up in prices on average 13% versus one year ago.

    OCEAN FREIGHT

    The World Container Index showed a continuation of the down trend in prices averaging 18% lower in Q1 versus Q4 of 2022. Year over year, the World Container Index was down 79% versus one year ago.

    COST OF LABOR

    Most Asian labor rates were unchanged in the first quarter. Year over year, labor costs in China was flat in average, however, Fujian and Hunan areas were both up about 13%.  Indonesia and Vietnam were both up 6% and Thailand was up 7%.

    CURRENCY EXCHANGE RATE

    For the first quarter, the USD weakened against CNY by about 1% versus last quarter ending at around 6.85. Year over year, the USD was stronger against CNY by 8%.

    CHINA TRADE (Data lags by one month)

    China Imports were up by 2.6% and China Exports decreased 26.7%. Year over year, China Imports increased 5.5% and Exports decreased 1.4% versus one year ago.

    The China Consumer Price Index (CPI) was down 0.3% and the China Producer Price Index (PPI) decreased 1.2%. Year over year, the China CPI was down 0.8% and China PPI was down 10% versus one year ago.

    PURCHASING MANAGERS INDEX (PMI)

    The China PMI improved greatly in Q1 ending the quarter at 51.9, above the benchmark 50 for an expanding economy and the Hong Kong PMI ended at 53.5, even higher above the 50 mark. Conversely, the US PMI remained about the same as it started the quarter below 50, with the Manufacturing PMI at 46.3 in March, the lowest since May of 2020, and compared to 47.7 in February implying that rising interest rates and growing recession fears are starting to weigh on businesses.

    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 also 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.

  2. Manufacturing Costs Moved Slightly Lower in Q2, 2022

    Comments Off on Manufacturing Costs Moved Slightly Lower in Q2, 2022

    ASIA MANUFACTURING COST DRIVERS REPORT

    Q2– 2022 (April, May, June)

    Tracking The Trends Which Drive Costs in Asian Manufacturing

    Executive Summary

    On average, manufacturing costs moved slightly lower in Q2.  Most grades of plastics, rubber, steel, aluminum, metals, wood, fuel, and shipping costs, all were lower in price while only textiles showed an increase and paper was unchanged.  Meanwhile, the US dollar strengthened against most major Asian currencies.  In China, both imports and exports grew in the quarter while the CPI and PPI were both up and the PMI indexes edged up as well.

    While China remains closed to foreign visitors, Vietnam and Thailand have now re-opened their borders to foreign visitors and business people.  Overall, manufacturing demand in Asia countries improved in Q2, however, signs are pointing to softer demand as we enter Q3. The continued uncertainty of the COVID pandemic, the possibility of a recession, rising interest rates, and unstable geopolitical events remain the biggest variables having an influence on Asia manufacturing costs. We will be monitoring these in the coming weeks and months as things develop.

    Below is a chart of the general trends and for all the details, please see the entire report for all the details:

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    REPORT DETAILS – Manufacturing Costs Moved Slightly Lower in Q2, 2022

    PLASTICS & RUBBER

    Prices for general purpose plastic resins were mixed in Q2.  PVC prices were down the most at around 15%, followed by HIPS and PP both down around 3%. EVA was up sharply but almost 16%, followed by PS up almost 8%, PE up 5% and PET up 4%. Year over year, the trends are also mixed with EVA up 44%, PE up 18%, HDPE up 7%, followed by PS, PET, and PP up slightly. PVC and HIPS are both down in price 19% and 10% respectively.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    Most grades of engineering plastic prices were down in the quarter led by ABS, POM, and PC down 12.%, 7%, and 6% respectively. On the flip side, Nylon was up 7% and Triton was up slightly. Year over year, the major movers were ABS down 26%, PC down 16%, and Nylon down 15%, while most other engineering grade plastic resins were up slightly or unchanged.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    Rubber prices in Q2 showed a slight downward trend with Silicon down the most at 33.3%. The other major movers were Natural Rubber down 3% and EPDM down 2% while Nitrile and Neoprene Rubbers rose 11% and 8% respectively.  Year over year, the trends are similar with Neoprene Rubber up almost 58% in price, Nitrile up 18% and Polybutadiene Rubber up 23% while Silicon Rubber was down in price almost 36%, Latex Rubber down almost 8%, Natural Rubber down 4% and EPDM Rubber was flat.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    METALS

    For the second quarter of 2022, the prices for most grades of Carbon Steel were down sharply on average 8% versus Q1. Cold and Cold Rolled Steel were both down around 10% while raw Pig Iron prices were flat. Year over year, most of carbon steels in prices were down on average 10 – 15% versus one year ago.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    In the Stainless Steel grades, the trend was similar with prices down on average by 12% versus Q1. Year over year, the trend is mixed with 430 down 14%, 304 up 3%, 410 down 7%, 201 up 2%, and 420 down 1% versus one year ago.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    Aluminum prices were down in the second quarter on the average of 13% versus Q1. Year over year, however, most aluminum prices increased on average about 7% versus one year ago led by 6061 up 13% A380 up 12%, and 3003 up 7%.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    In other Industrial Metals, the trend was down in Q2 on average by about 10%, led by Nickel down 15%, Brass, down 14%, copper down 13%, and Zinc down 8% versus Q1. Year over year, the average price was up by almost 6% versus one year ago, led by Nickel up 35% and Zinc up11%.  Decliners included Brass and Copper both down around 5%.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    WOOD, PAPER & TEXTILES

    Wood prices were down slightly in Q2, about 1%. Year over year prices are up versus one year ago, with MDF board up 7%, Fir up 3%, White Oak up 1%, Pine up 2% and Beech up 3%.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    Paper prices were mostly flat in the second quarter. Year over year, most paper prices are down versus one year ago with Kraft down 15%, Corrugated down 7%, and White Cardboard down 1%, while Gray Cardboard and Art Paper are both up in price 11% and 8% respectively, versus one year ago.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    Most Textile fabric prices were up slightly up in Q1 versus than last quarter except Raw cotton which dropped almost 20 in price in the quarter. Year over year, the price trend is up led by Raw Cotton up 15%, Polyester Fabric up about 8%, and PVC Fabric up about 5%, while most other textile fabrics show little change in price versus one year ago.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    CERAMIC AND GLASS RAW MATERIALS

    Ceramic and Glass Raw Materials saw little change in price in Q2 except Soda Ash which was up by about 14%. Year over year, most of material prices were stable except Soda Ash which was up 60% and Glass Grade Sand up a little over 4% versus one year ago.

    Manufacturing Costs Moved Slightly Lower in Q2, 2022

    FUEL

    Fuel prices in China were down in Q2 versus Q1, with Petroleum down 18%, Natural Gas down 17% and LGP Gas down 16%. Year over year, the trend for fuel was up significantly versus one year ago, led by LPG up 33%, followed by Diesel, Petroleum, and Natural Gas up around 25% each

    OCEAN FREIGHT

    The World Container Index dropped about 15% in Q2 versus last quarter. Year over year, container freight prices are down 15-20% versus 2021.

    COST OF LABOR

    Most of the Asian labor rates were unchanged in Q2. Year over year, Labor costs in China, Indonesia, and Vietnam were all up around 5%

    CURRENCY EXCHANGE RATE

    For the second quarter, the USD strengthened against most of the Asia currencies, on average by 5%.  The US Dollar finished the quarter versus the China RMB at 6.65:1.  Year over year, the USD was stronger against Thai Baht and Bangladesh Taka by 10%, the India Rupee by 6%, China RMB by 4% and the Vietnam Dong by 2%.

    CHINA TRADE (Data lags by one month)

    China Imports were up 33% and Exports were up 42% in Q2 versus Q1. Year over year, China Imports increased 5% and Exports increased 17% versus one year ago.

    PURCHASING MANAGERS INDEX (PMI)

    The China and Hong Kong PMI ended the quarter at 50.2 and 51.7 respectively and entered expansion territory for the first time in 2022, while the US PMI ended at 53 to remain in expansion territory (above 50).

    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 Minh, Vietnam. Our passion is to partner with companies in supply management from Asia. We have a three-decade long 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.

    DOWNLOAD THE REPORT HERE

    Visit our website at: www.sourceint.com

    Data for this report comes from various reliable sources 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.