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China's exports of cooktops, hoods and ovens are rising steeply, even as suppliers continue to grapple with increasing production costs and intense price competition. According to China customs statistics, the country exported nearly 51 million cooking appliances worth US$801 million during the first half of 2006. These numbers represent an increase of 15 percent in volume and 27 percent in value from the same period in 2005. In particular, range hoods exhibited tremendous growth. Suppliers shipped more than 1 million units worth US$43 million between January and June of 2006, up 84 percent in value and 39 percent in volume from the same six-month period of the previous year. The volume and value of gas and electric cooking appliance exports, however, dwarf range hood shipments. China makers sent abroad nearly 50 million gas and electric cooking appliances worth US$758 million during the first half of 2006, an increase of 24 percent in value and 15 percent in volume from January through June 2005. Although cooktops are just one type of cooking appliance among many in the broad product category, they represent the bulk of the country's exports. In this report, cooktops account for more than half of total products exported by featured suppliers. The higher export value growth rates indicate an increase in the shipments of midrange and high-end models from China. In fact, more makers will continue to move toward upscale production by boosting manufacturing capability. Makers face rising production costs
Mounting production costs are affecting the bottom lines of nearly all manufacturing industries in China, and cooktop, hood and oven makers are also feeling the heat. From escalating raw material costs to labor shortages, companies are finding it more difficult to turn a profit. High material costs have hurt cooking appliance suppliers, particularly those exporting to the EU. These companies must follow the RoHS directive and pay for compliant components that typically cost 5 to 10 percent more than noncompliant versions. The prices of raw materials, especially metals, have risen dramatically since 2004. For instance, steel prices have risen more than 30 percent since 2005. Prices dropped marginally late last year because of oversupply. The downward trend continued in the first quarter of 2006. But prices have since rebounded and are expected to continue rising in the coming months as demand for the material grows. Increasing production costs in the energy-intensive steel industry are also pushing steel costs up. Skyrocketing nickel prices also affect steel prices, mainly stainless steel. The most common stainless steel used in cooking appliances are grades 301 and 304, which both contain 6 to 8 percent nickel.
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 All information contained in China Sourcing Reports is the result of exclusive, ground-level and definitive research conducted by Global Sources' analysts. Companies featured in these reports may or may not be clients of Global Sources.
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