ASIA MANUFACTURING COST DRIVERS REPORT-Q2, 2017

ASIA MANUFACTURING COST DRIVERS REPORT

Q2 – 2017 (April, May, June)

Tracking The Trends Which Drive Costs In Asian Manufacturing

PLASTICS & RUBBER

• All General Purpose plastic resin prices were down in the second quarter, PP(K8303), Food Grade PP, PE and PS down significantly (on average about 10.5%) and the others only down in price marginally. Year over year, PP(K8303) and Food Grade PP prices are down over 17% and 22% respectively, but most plastic prices remain up in price versus one year ago. HIPS is up the most (close to 25%) followed by PVC up 14% and HDPE up 7.5% and the others going down by small amounts.

• Engineering plastic resin prices were more mixed with POM and PC prices up by 5% & 6% respectively, while Nylon, PA6 and PU Foam were down by 7% on average. Year over year, ABS is up in price the most at 35% followed by PC and PA6 up over 20% and the others only up in prices marginally while POM is the only grade which remains unchanged in price versus one year

• Most of the Rubber prices were down in Q2, BR saw a huge drop in price, down over 35% and SCR5, Latex, EPDM prices all down over 10% and NBR down a little. CR is the only one which was up in price (close to 6%).Year over year, except for Latex which is lower in price over 51%, CR price is up over 53% and BR, SCR5, NBR are all up on average 15 % and EPDM up over 3% versus one year.

METALS

• For the second quarter of 2017, prices for Carbon Steel were mixed, with Pig Iron and Cold Rolled Steel Plate down an average of 13% and Tinplate and Cold Roll Steel Sheet down an average of 4.4%. Prices, however, for Hot Roll Tubes and Cold Roll Steel Tube were up in price by over 18% while Hot Roll Steel Sheet and Steel Wire were up a little. Year over year, the trend is more even with all grades of Carbon Steel up double digits over 44% on

• In the Stainless Steel part, most grades were down in price between 5% – 16% with 201 grade down the most while 202 grade up a little in the second quarter. Year over year, the trend remains up with most grades of stainless steel up in price on average about 11% versus one year ago. Except for 304 grade down close to 15%.

• Most aluminum grades rose in price 0.6% in the second quarter while ADC12 and A3380 were down close to 2%, and year over year, most prices are up between 3 and 7% while A380 is down over 2%.

• In Other Industrial Metals, only Brass Tube’s price was down in Q2 while Nickel and Zinc was down by 8% &3% and the rest of metals were down marginally. Year over year, most metals prices are up over 20% except Nickel’s price is down slightly versus one year

WOOD, PAPER & TEXTILES

• Wood prices inched slightly lower in Q2 except Beech which was up 3%. Year over year, Beech’s price up over 7% and the others only up

• Meanwhile all grades of Paper Materials were up in price in the second quarter with Art Paper up in price by 13% followed by Gray Cardboard and White Cardboard up by 4%&5% respectively and the rest up in price marginally. Year over year, all paper prices remain higher, with Art Paper remaining up by almost 26% in price while Gray and White Cardboard are up almost 19%&15% and the others are on average by 2%.

• Textile fabric prices saw little change in the second quarter with Raw Cotton, 100% Cotton Fabric and Poly/Cotton Fabric up slightly and the rest were unchanged. Year over year, all prices are higher, with Raw Cotton and 100% Polyester Fabric PP up in price the most at 21% and 13% respectively and the rest up slightly versus one year

CERAMIC AND GLASS RAW MATERIALS

In Ceramic Raw Materials, only Alumina prices was up slightly, while in Glass Raw Materials Soda Ash was down in price over 7% and Glass Sand marginally. Year over year, Alumina is up in price by over 32%, followed by Feldspar and Kaolin up 7%&2%, while Glass Grade Sand is lower over 15% and Quartz down in price marginally versus one year ago.

FUEL

Fuel prices in China were generally going down in the range of 21% in the second quarter and year over year, all fuels are up in price with Industrial Electric up significantly over 21% followed by Natural Gas and LPG Gas up on average 7% versus one year ago.

OCEAN FREIGHT

Ocean freight rates haven’t been updated yet in Q2.

COST OF LABOR

Asian labor rates saw little change in the second quarter with China Labor up almost 5% and the rest remained unchanged. Year over year, rates are up in most countries with India up the most (over 9%) followed by Indonesia (up 8%), Vietnam (up 7%), China (up 5%) and Thailand (up 1.6%) while Bangladesh saw little to no significant change.

CURRENCY EXCHANGE RATE

For the first quarter, the USD strengthened slightly against the Bangladesh Taka and weakened ever so slightly against the Chinese Yuan and Vietnamese Dong with the Thai Baht, NT Dollar and Indian Rupee stronger by about 5%. Year over year, the biggest gains for the USD are against the China RMB, Bangladesh Taka, Vietnam Dong and Indonesia Rupiah while its slightly weaker against the Thai Baht, NT Dollar and Indian Rupee.

CHINA TRADE (Data lags by one month)

• China Imports and Exports were both up significantly by 16% & 59% respectively in the latest three months. Year over year, China Exports are up by almost 14% and China Imports are up by over 5%.
• The China Producer Price Index (PPI) gone down 2% in the second quarter while the China Consumer Price Index (CPI) rose slightly. Year over year, the China PPI is up over 8% while the China CPI is down slightly versus one year

PURCHASING MANAGERS INDEX (PMI)

All the PMI Indexes have been climbing steadily throughout the quarter and all were above 50 at the end of the quarter. Year-on-year, all indexes show upward trends indicating growth and an expanding economy.

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. Our passion is to partner with companies in supply management from Asia. We have a 25 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.

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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.