China’s ABS Market in 2015

By Huang Jinxia, the Synthetic Resin Plant of PetroChina Jilin Petrochemical Co., Ltd.,

Production

In 2015, Mainland China had 11 acrylonitrile-butadiene-styrene resin (ABS) producers with a total capacity of 3.66 million t/a and output of around 3.26 million tons, up 437 kt year-on-year. ABS capacity is mainly in East China (61% of the national total). Major ABS producers in East China are joint venture enterprises like Zhenjiang Chi Mei Chemical Co., Ltd., Ningbo LG Yongxing Chemical Co., Ltd. and Formosa Plastics (Ningbo) Co., Ltd. The capacity to make ABS in Northeast China accounts for around 24% of the total, and major ABS producers in Northeast China are PetroChina Jilin Petrochemical Co., Ltd., PetroChina Daqing Petrochemical Co., Ltd. and Liaoning Huajin Chemical (Group) Co., Ltd. The ABS enterprise in North China is Tianjin Dagu Chemical Co., Ltd. PetroChina Lanzhou Petrochemical Co., Ltd. is the ABS enterprise in Northwest China, and the ABS enterprise in South China is CNOOC & LG Petrochemicals Co., Ltd.
Most domestic ABS units maintained normal operation in 2015, and the overall operating rate of the units was 89%. China’s major ABS producers in 2015 are listed in Table 1.
In 2015, competition in the ABS general-purpose materials market was fierce, the capacity was seriously in excess, and this situation continues in 2016. It is expected that in 2016, there will be no new ABS capacity.

Table 1   China’s major ABS producers in 2015

Producer    Capacity (kt/a)    Output (kt)    Operating rate (%)
Zhenjiang Chi Mei Chemical Co., Ltd.    800    750    81.2
Ningbo LG Yongxing Chemical Co., Ltd.    680    720    105.9
PetroChina Jilin Petrochemical Co., Ltd.    580    536.6    92.5
Formosa Plastics (Ningbo) Co., Ltd.    500    467    93.4
Tianjin Dagu Chemical Co., Ltd.    400    364    91.0
Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd.    200    165.8    82.9
Liaoning Huajin?Chemical (Group) Co., Ltd.    190    23.7    12.5
CNOOC & LG Petrochemicals Co., Ltd.     150    131    88.0
PetroChina Daqing Petrochemical Co., Ltd.    100    93.8    93.8
Shanghai Huayi Polymer Co., Ltd.     38    8    21.1
PetroChina Lanzhou Petrochemical Co., Ltd.    20    2.5    12.5
Total    3 658    3 262.4    89.18


Consumption

China’s apparent consumption of ABS reached around 4.86 million tons in 2015, up around 400 kt year-on-year.
ABS in China is mainly consumed in making automobiles and household electric appliances. The consumption of ABS in electronic/electric appliance fittings such as?refrigerators, televisions, telephones, office equipment and other small household electric appliances accounts for around 80% of the total. The consumption of ABS in making toys and ITE equipment each accounts for around 10%. In the electronic/electric appliance sector, the demand for ABS in making computers, air conditioners and duplicating machines has grown rapidly in recent years. High-impact ABS with heat resistance for automobile fittings, board grade ABS for refrigerators and flame retardant grade ABS for computers will become new growing points for demand.
Despite its rapid growth of ABS capacity and output, China still imports much ABS each year. In 2015, China imported 1.62 million tons of ABS, down 43.4 kt year-on-year. China’s supply and demand for ABS during 2011-2015 are shown in Table 2.

Table 2   China’s supply & demand for ABS, 2011-2015

Year    Output
(kt)    Import
(kt)    Export
(kt)    Apparent
consumption (kt)    Self-sufficiency
rate (%)
2011    2 149    1 852.7    43    3 958.7    54.3
2012    2 109    1 665.4    41.6    3 732.8    56.5
2013    2 297.2    1 669.9    31.3    3 935.8    58.4
2014    2 825    1 668.3    33.2    4 460.1    63.3
2015    3 262.4    1 624.9    23.5    4 863.8    67.1


Table 3   China’s import & export of ABS, 2011-2015

Year    Import volume
(kt)    YoY growth
(%)    Export volume
(kt)    YoY growth
(%)
2011    1 852.7    -14.6    43    -21.8
2012    1 665.4    -10.1    41.6    -0.04
2013    1 669.9    0.3    31.3    -24.8
2014    1 668.3    0.009    33.2    0.06
2015    1 624.9    -2.6    23.5    -29.2


Table 4   China’s import sources of ABS, 2015

Import source    Import volume
(kt)
Taiwan province    835.9
South Korea    564.5
Malaysia    69.7
Japan    58.6
Thailand    50.0
Others    46.2
Total     1 624.9


It is expected that China’s average annual growth of ABS demand will be 4%, and the annual domestic demand for ABS will reach 6.0 million tons by 2020. With the drastic growth of domestic ABS capacity and the continual improvement of technical capabilities, China will import less ABS gradually over the next few years, and ABS self-sufficiency will increase constantly, expected to reach over 70% by 2016.

Price

In early 2015, domestic ABS prices bottomed out. In March, due to a significant price rise of raw materials styrene and butadiene, and with the shutdown and overhaul of the ABS unit in PetroChina Jilin Petrochemical Co., Ltd., ABS prices soared. In April, prices peaked at RMB13 500/t. Afterward, due to a decline in the domestic stock market and the slide of crude oil prices, the prices of styrene and butadiene plummeted sharply, ABS-downstream plants were off season and the overall operating rate was lower, resulting in a drastic price drop for ABS. The price of ABS was RMB8 830/t at the end of 2015. The domestic ABS price trend of 2015 is listed in Figure 1.

Import and export

China’s capacity to make ABS is in excess, but China still imports a large amount of ABS each year. Since 2011, China’s import volume of ABS has declined year by year. China’s import and export of ABS during 2011-2015 are listed in Table 3.
China’s major?import sources of ABS were Taiwan province and South Korea, together accounting for over 85% of the total volume imported. In addition, China’s import sources of ABS included Malaysia, Japan and Thailand. China’s import sources of ABS in 2015 are shown in Table 4.
On June 1, 2015, China and South Korea signed the Free Trade Agreement. After the agreement takes effect, a zero tariff may well be applied to over 90% of imported products. In recent years, China’s dependence on imported ABS has decreased constantly; however, the imports account for around 38% of apparent consumption. China’s tariff on ABS is 16%. Under the premise of maximizing openness, the tariff on ABS may gradually be reduced based on sensitivity, possibly reaching zero. In the market, ABS materials imported from South Korea include mainly high-end materials like 121H from LG and 750SW from Kumho. The price of materials imported from South Korea will fall around RMB130/t when the tariff decreases by 1%. With the constant reduction of the tariff, the materials from South Korea will have a direct impact on domestic trade.