The ABS Industry Pattern Will Change in 2022

Nov 14, 2022

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1、 The manufacturer starts construction based on the inventory and profit, and the high load operation throughout the year shows signs of change

In 2017-2021, ABS Petrochemical Plant was overloaded throughout the year. Except for routine maintenance, there were few long-term shutdown or load reduction; However, in June July 2022, due to the shortage of terminal orders, ABS prices continued to decline, manufacturers’ inventories were high, and apparent profits suffered losses. Some petrochemical plants began to reduce their loads. The overload operation of the whole year has reversed. Although after July, with the decline of styrene prices, the operating rate of the ABS industry returned to more than 90%, the decline in inventory and profits occurred for the first time in five years. This may be a signal that the industry pattern has changed, and the era of high profitability in the ABS industry may have ended.

2、 The manufacturer’s profits have shrunk significantly, and the situation of “lying and winning” has changed in previous years

In 2017-2021, the profits of the ABS industry were 2517 yuan/ton, 1332 yuan/ton, 1168 yuan/ton, 4151.8 yuan/ton and 5561 yuan/ton, respectively. However, it is worth noting that the decline in the profits of the ABS industry in 2018-2019 was mainly due to the high price of styrene caused by China’s anti-dumping duty on styrene, which compressed the profits of the ABS industry. The ABS industry still maintained an industrial pattern of short supply in 18-19; From 2020 to 2021, with the centralized production of domestic styrene plants, the price will fall. ABS terminal demand will remain strong, the price will be high, and the industry profit will explode. Since 2022, due to the outflow of terminal orders, domestic demand has been poor. In addition, the new unit of Liaoning Jinfa has been put into operation. The ABS industry suffered losses in the short term from June to July. Some petrochemical plants have been operating under reduced load, which has changed the situation of winning in previous years.

3、 After Zhangzhou Qimei was put into production, the import volume gradually decreased and is expected to continue to decrease in the future; Developing foreign markets is a problem that every market participant is considering

From 17 to 19, the import volume of ABS industry increased year by year, reaching a peak of 2.04 million tons/year in the year of 19. After Zhangzhou Qimei was put into production in 2020, the import volume began to decrease. The total import volume in 2020 was 2.016 million tons. In 2021, the capacity expansion of LG Huizhou plant was 150000 tons, intensifying the competition in the industry. ABS continued to decrease by 260000 tons/year. In 2022, Liaoning Jinfa plant was put into production, and the import volume of ABS continued to decrease by 240000 tons year-on-year (as of August). In the future, as more ABS new devices are put into production, it will be normal for the import volume to decrease year by year. The peak of ABS import volume will remain at 2.04 million tons in 2019. With the intensification of industry competition, it is not ruled out that the future import volume of ABS will fall below one million tons. At the same time, developing foreign markets is a problem that every ABS market participant is considering at present. If you can operate exports, it will be of positive significance to reduce domestic supply pressure, increase foreign exchange and corporate profits, and achieve full utilization of production capacity.

4、 The petrochemical giant will still be put into production in the future, and the industry competition will be more fierce

In the future, there will be 6-7 million tons/year of new units put into production in the ABS industry, among which petrochemical giants that do not integrate refining and chemical industries will enter the field, or they will look at the profits of the ABS industry, or maintain their own material balance. But it is certain that the competition in the ABS industry will be more intense in the future, and more domestic materials will be put into the market. In the future, it will be a problem for every petrochemical plant to consider to compete for services, prices, performance and after-sales services.

5、 The buyer’s market deepens and the bargaining power of petrochemical plants weakens

With the intensification of the contradiction between supply and demand, under the guidance of the policy of “deregulation, regulation and service”, the access to the domestic middle and lower reaches is gradually relaxed, and the market vitality is stimulated, but it will enter the buyer’s market more quickly, and the seller’s bargaining power will decline.