# Raw Material Index Price Adjustment Clause Calculator for China Suppliers > Source: https://netray.co/tools/china-raw-material-index-price-adjustment-clause-calculator > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: Free Tools ## Short answer Calculate the new unit price and annual cost impact when copper, steel or resin indexes move, using a deadband and a pass-through share. ## Category supply-chain ## Region China ## Industry Manufacturing ## Audience - Buyer - Sourcing manager - Supplier manager - Finance controller ## Tool **Kind:** calculator **Currency:** CNY **Inputs:** #### Base unit price **Key:** base_price **Type:** number **Default:** 12.5 **Min:** 0 **Step:** 0.1 **Unit:** CNY #### Material share of price **Key:** share **Type:** slider **Default:** 55 **Min:** 0 **Max:** 100 **Step:** 1 **Unit:** % **Help:** Portion of the unit price that is driven by the indexed material. #### Base index level **Key:** base_index **Type:** number **Default:** 68000 **Min:** 1 **Step:** 100 **Unit:** CNY/t **Help:** Index value agreed in the contract, for example a monthly average copper price. #### Current index level **Key:** current_index **Type:** slider **Default:** 74000 **Min:** 40000 **Max:** 110000 **Step:** 500 **Unit:** CNY/t #### Deadband before adjustment **Key:** deadband **Type:** number **Default:** 3 **Min:** 0 **Max:** 20 **Step:** 0.5 **Unit:** % **Help:** No adjustment unless the index moves by more than this percentage. #### Pass-through share **Key:** pass **Type:** slider **Default:** 100 **Min:** 0 **Max:** 100 **Step:** 5 **Unit:** % #### Annual volume **Key:** volume **Type:** number **Default:** 120000 **Min:** 0 **Step:** 1000 **Unit:** units **Outputs:** #### Index change **Key:** change **Expr:** (current_index / base_index - 1) * 100 **Format:** percent #### Clause triggered (1 = yes) **Key:** triggered **Expr:** if(gt(abs(change), deadband), 1, 0) **Format:** integer #### Price adjustment **Key:** adj **Expr:** triggered * change * share / 100 * pass / 100 **Format:** percent #### New unit price **Key:** new_price **Expr:** base_price * (1 + adj / 100) **Format:** currency **Primary:** true #### Change per unit **Key:** delta **Expr:** new_price - base_price **Format:** currency #### Annual cost impact **Key:** annual **Expr:** delta * volume **Format:** currency **Primary:** true **Chart:** #### New unit price vs current index level **Type:** line **X:** current_index **From:** 40000 **To:** 110000 **Steps:** 36 **Series:** - new_price **Disclaimer:** Illustrative model of one common clause design. Your contract may adjust only the excess over the deadband, use lagged averages or set caps. Follow the signed wording. ## Content **Intro:** Metal, resin and component prices swing during a contract year, and suppliers in China often ask for a surcharge when the market moves. An index-linked clause makes the adjustment mechanical. This calculator models the common design so both sides can test it before signing. **Sections:** #### How to use it **Body:** Set the base unit price, the share of that price that depends on the indexed material, and the index level agreed at signature. Enter the current index and the deadband below which no adjustment is made. Set the pass-through share, 100 percent for a full pass-through or less for sharing the risk. The calculator returns the percentage adjustment, the new unit price and the annual cost impact. Drag the current index slider or read the chart to find where your budget breaks. #### The formula **Body:** Index change is current divided by base minus one. If the absolute change exceeds the deadband, the price adjustment equals change times material share times pass-through. New price is base price times one plus the adjustment. Many contracts also cap the adjustment, use a three month lagged average, or adjust only the excess beyond the deadband, so change the inputs or the arithmetic to match the clause you actually sign. **Bullets:** - Adjustment = change x material share x pass-through - No adjustment inside the deadband - Use the average of agreed months, not a daily spot price - Reset the base index after each adjustment if the contract says so #### Worked example and traps **Body:** With a price of 12.50, a 55 percent material share, and the index moving from 68,000 to 74,000, the change is 8.8 percent. The deadband is passed, so the adjustment is 8.8 x 0.55 = 4.9 percent. The new price is 13.11 and the annual impact is about 73,000 on 120,000 units. Traps include indexing the whole price instead of the material share, picking an index that does not match the supplier's real input, and forgetting that downward moves should adjust symmetrically. **Cta:** If you want index prices, contract terms and PO prices side by side, Netray can build a read-only price variance report from your ERP. It can stay on your own servers. **Faq:** #### What index should I use? **Answer:** Pick a published, auditable series that tracks the supplier's input, such as a Shanghai Futures Exchange or Shanghai Metals Market price for copper or aluminium. Define the averaging period in the contract. #### Why use a deadband? **Answer:** A deadband avoids small administrative adjustments for normal noise. It also stops either side from reopening price every month. Typical bands are a few percent, set by volatility and order size. #### Should the clause work both ways? **Answer:** Yes. A symmetric clause protects the supplier when the index rises and the buyer when it falls. One-way clauses are common in supplier drafts, so negotiate for symmetry. #### Does the material share stay constant? **Answer:** Not exactly. If price changes, the share changes too. Contracts normally fix the share at signature and refresh it at defined review points to keep the formula simple. ## Search terms price adjustment clause calculator, raw material index pricing calculator, copper price pass through calculator, china supplier price increase calculator, steel index price adjustment formula, commodity surcharge calculator, index linked pricing contract --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json