If you are in the building materials industry, or bathroom products, or just specifically in shower door, shower enclosure business, you would find the cost price from China raising too high in the past half year of 2021. Please hold on, and do not complain first, we will tell all the reasons from the origin of supplying to global USD exchange rate.
Shower Door’s cost price mainly depends on these two raw materials: aluminum and tempered glass, if not consider using too many hinges of the hinges doors. So we have to pay attention to the raw materials cost tread, to know the final price tread and set your purchasing timing.
Look below tempered glass price index trend in past half year and since 2012 separately:
And check below aluminum price index trend in past half year and since 2012 separately:
Both aluminum and tempered glass cost price hit history high in the past more than 10 years, especially the tempered glass, more than doubled, what’s worse, there is a period the market is short of glass raw materials, many tempered shower door manufacturers just stuck on glass and can’t deliver on time as usual which is around 30days, delivery terms change to 50 – 60 days.
Compared with materials short supply and late arrive, the cost price raised too high is the most headache thing. The materials high cost suddenly ate most or all the profit of manufacturers, price skyrocketing is from March to June, we are not sure if it could get control in the later half year, most materials sharply increased 50% since March till now, it’s very terrible. While the overseas importers and buyers, even us Chinese people who are in this market more than 15 years, still not get used to such high cost price either. We are in the dilemma, can’t raise selling price too high just according to the cost raising, or customers can’t take it, at the same, if we don’t raise to cover the cost, or squeeze too much on the already meager profit, factories will totally lose the interests to do this business. Some factory boss just tells frankly: if leave zero or too less profit from the order, they would rather not take it, and just sit free and take a break, instead of making the whole factory exhausted and get nothing….
But the pathetic truth is: many factories choose to sacrifice their poor profit and share the cost raising with their customers, maybe some items really lose money while they could make it even on other items so it’s still fine, just to keep the steady and friendly cooperation with partners, also to make the factory keep running, at least their workers won’t lose the job. I can say all the Chinese factories are experiencing really a hard time in the whole 2021. China’s high PPI data (production price index) tells everything. I’ll also say: the road is not always flat, it bumps, just like the life, sometimes we experience a good time with our customers, and now in the hard time, we should walk side by side, hand by hand to cross over the tough time, until the next period of smooth road coming. This is cooperation and real partners.
Recently we met a customer purchasing wheelbarrow, he can’t believe his old supplier suddenly raised around 30%, and want to change supplier. After we helped source almost all the Chinese wheelbarrow factories, we told him the price is no big difference at all, it’s quite transparent, I would suggest him to still place the orders in their old supplier if all others are fine, to keep quality steady in this hard time. I gave an example: there are total 10 breads and totally 10 USD in the world, if printing too much USD and make it doubled to 20 USD now, the bread cost per piece should be $2 instead of $1 as before, this is the current situation: called global inflation.
So raw materials cost price raising is one factor, the other factor is USD exchange rate depreciation against RMB, we can even say the later is the direct cause of the former, or closely affected. The FED printed too much US dollars last year during Covid-19 period to stimulate the economy, the USD inflation soon spread out to the whole world, just this time, China didn’t follow up, and the result is RMB appreciated from the high point around 7.1 to now around 6.3, about 12% falling down! It’s really making it even worse for Chinese exporters like us…..
Let’s make a bold forcast, if the later half year’s raw materials and exchange rate situation won’t have big change, Chinese suppliers would just prepare for a general 30% + price up for all glass related products like shower doors… By the way, for wheelbarrows, the general cost price already 30%+ up from last year till now.
If winter comes, can spring be far behind? Or what can I say?