Cookware

China's cookware manufacturing industry is grappling with soaring prices for both stainless steel and aluminum.

These rising material costs have resulted in a dramatic drop in export growth rates. While exports rose by 20% in 2003, they slowed to a mere 6% in 2004.

The incisive analysis in this report will help you evaluate what producers are doing to offset rising costs. It will also help you pre-qualify suppliers that best meet your needs.

Plus, you'll get supplier profiles and a detailed industry overview — including product developments, price forecasts and more — covering issues that will impact your 2005 sourcing decisions.

What you'll get

Deep profiles of 15 major cookware makers that provide detailed information on manufacturing capabilities, product offerings and future plans. Based on factory tours and personal interviews with senior managers, these profiles are available nowhere else

Profiles of an additional 56 suppliers featuring key information such as machinery installed, export sales, and production, output and export volumes

A Product Gallery highlighting 126 best-selling products with specifications and full-color pictures

The results of Global Sources' latest supplier survey, forecasting price, product, production and R&D trends for the next 12 months

This report covers: stainless steel cookware, aluminum cookware, ceramic cookware, cast-iron cookware and copper cookware

How you'll benefit

Receive price guides for stainless steel, aluminum, cast-iron and ceramic cookware

Get an understanding of how manufacturers are dealing with such issues as design copying and the safety of non-stick coatings

Take a look at testing procedures used for raw materials and processes used in cookware-part production

Find out what R&D and design teams are doing to improve the quality and lifespan of China-made cookware

Executive summary

Export growth rates of China-made cookware have declined considerably in the past year. While exports in terms of value grew by 23 percent in 2003, growth rate dropped to 13 percent in January to November 2004, as compared with the same period in the previous year. Correspondingly, the export volume growth rate was 20 percent in 2003, but plummeted to 6 percent in 2004.

The downward trend is mainly attributed to a decline in export growth of stainless steel cookware, which accounts for more than 66 percent of China's total exports. Sharp cost increases in industrial metals and other raw materials are a major factor contributing to falling stainless export growth rates. Since the third quarter of 2003, China's cookware industry has been coping with the mounting costs of stainless steel and aluminum, and to some extent, of plastic, for cookware parts. While the cost of stainless steel is expected to continue rising this year, it will not increase as steeply as in 2004.

The following are some of the key trends we see in China's cookware export industry in the next 12 months:

• Suppliers of metal cookware will increase prices as raw material costs continue to eat into earnings. Price ranges for most aluminum cookware will increase by 10 percent, while those of stainless steel will go up by as much as 40 percent.

• As makers pass on the additional costs to buyers, they will improve the value of their products by developing longer-lifespan cookware.

• Despite increasing costs, the industry is upbeat about export growth in 2005, and many suppliers are expanding capacity, upgrading production and R&D facilities, and adding equipment as they plan for higher export targets.

• Design copying of products and packaging continues to be an issue among makers of midrange and high-end products.

This report covers the major cookware products, including skillets, frying pans, woks, saucepans, stockpots, Dutch ovens, pressure cookers and ovenware. In the Products & Prices section of this report, these products are categorized and discussed according to material, namely stainless steel, aluminum, cast iron, copper and ceramic.

The Manufacturing section describes the major production processes and testing procedures for raw materials and cookware parts. More information on raw materials, coatings and other components is found in the Materials & Components module.

The cookware industry in China consists of about 1,000 manufacturers. It is largely composed of midsize companies, most of which are privately owned with direct export capability.

The influx of cookware suppliers from Taiwan, Japan, South Korea and other regions, to mainland China has also enriched the industry mix. In this report, about 20 percent of makers are foreign-invested or joint ventures. This report also includes an overview of the industry in Taiwan, which has only about 10 suppliers left, as most companies have moved their production to the mainland.

Industry overview

China's cookware manufacturing industry is reeling under the pressures of soaring steel and aluminum costs, which have been continuously rising since the third quarter of 2003. Stainless-steel cookware makers are especially hard hit since the cost of this material rose by almost 70 percent in 2004. Although aluminum costs have also increased by a significant 40 percent, cookware makers using this material are actually benefiting from the steep rise in stainless-steel prices.

Since stainless-steel and aluminum cookware comprise the majority of cookware exports from China, price hikes are inevitable in 2005 as most suppliers are unable to absorb further cost increases. This is despite the fact that material prices are not expected to rise as steeply as they did last year.

In the next 12 months, buyers can expect stainless-steel cookware prices to increase by up to 40 percent, and aluminum models to be up to 10 percent more expensive. Prices of low-end cookware will be the most affected since the share of material cost in the total production cost of low-end cookware is much higher than in midrange or high-end items.

As a result of escalating material costs, cookware suppliers have been squeezing profit margins since intense competition in the industry does not allow them to increase export prices substantially.

To remain competitive, some makers are improving the quality of their products. Suppliers of metal cookware are focusing on longer product lifespan through the application of better materials and processes that eliminate deforming, peeling and other defects common in substandard cookware. They have also been investing in brazing and impact-bonding machines to make multi-ply bases. Ceramic cookware makers are focusing on safety, particularly in producing leadand cadmium-free models.

If material prices continue to rise, some of the smaller suppliers will inevitably start cutting corners in production. Suppliers with insufficient capital might also lose export orders and end up subcontracting for large makers. Some of these makers might not be able to survive the pressures, resulting in a shakeout in the industry.

Apart from escalating production costs, China makers are also dealing with design copying, as suppliers copy each other's designs to the extent that the imitation is sometimes released before the original design hits the market.

Large companies, most of which are foreign-invested, are the worst affected since they spend sizeable amounts on design development. Although there is no way to stop illegal copying, some makers are trying to curb it by patenting their designs or releasing new products more frequently.

Another issue concerning the industry is the safety of nonstick coatings, which came into question after DuPont was found to have withheld test results from the US Food & Drug Administration on the possible health hazards of Teflon in 2004. The product is still under further investigation in China and the US as of January 2005, but the application of Teflon has already dropped to 30 percent from 90 percent since July 2004.

Samples of supplier profile

Bonanza Metalware Co. Ltd
Established in 1998, Hong Kong-invested Bonanza specializes in the production of stainless-steel cookware. It has also released some copper cookware models.

The company's total annual sales for 2004 amounted to $13 million, 35 percent higher compared to the previous year.

OEM orders account for about half of exports. Tesco in the UK is a major overseas customer.

Products
R&D investments for 2004 amounted to US$200,000 or about 1.5 percent of annual sales. Fifteen R&D members design 15 percent of products. It takes one to two months for the company to release new products.

Saucepans, casseroles and stockpots constitute about 55 percent of export volume. Pressure cookers and steamers account for 30 percent, and woks and frying pans for the rest. Among the company's products are a three-ply cookware set consisting of cast stainless steel casseroles in sizes 16, 20 and 24cm. It also offers a copper cookware set with glass lids.

It uses 18/10 stainless steel with thicknesses of between 0.4 and 2.3mm, or 304 stainless steel. It also uses aluminum with thickness ranging from 0.7 to 3.8mm, depending on buyers' requests.

Prices depend on the thickness of the material that the cookware is made of. Low-end models made of 0.4mm thick stainless steel are usually priced at US$10, while midrange models with 0.5 to 0.8mm thick bodies are priced at US$10 to US$20 each. High-end models made of 2 or 2.3mm thick stainless steel sell for US$20 and up.

The company also manufactures glass lids, and Bakelite and silicon handles.

Manufacturing
The Global Sources team toured Bonanza's 30,000sqm, 600-worker factory in Jiangmen, Guangdong province. It houses two assembly lines with a total monthly capacity of 300,000 pieces.

The facility is equipped with four punching machines with a combined capacity of 63 tons, eight hydraulic pressure machines, two lathes and three edge-rolling machines. The hydraulic pressure machines are used for shaping sheared metal into cookware.

The company manufactures capsulated bases on eight brazing machines that braze copper or aluminum between two layers of stainless steel. Stainless steel and iron brazing is also available for electromagnetic ovens. It is common for iron-brazed bases to be pressed more than once to ensure the forging of the three layers.

After the shaping procedure, products go through a punching machine and then through a rivet machine. In another workshop, their edges are further refined using edge-rolling machines.

Sample of product gallery

Stainless steel cookware Bonanza Model: BSL-6SG Minimum order: One TEU Packaging type: Colored box Delivery time: 40 days Indicated price: US$28.00 Description: capsulated base; 14cm open milk pan, 16, 18 and 20cm saucepans with lids, 24cm open frying pan, and 24cm steamer insert; silicon handles

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