By Gao Liping, China National Chemical Information Center
Competition is fierce, market monopoly is serious
The capacity of ABS resin in China was around 3 700 kt/a in 2016 and the output was around 3 000 kt. As products produced in China are basically conventional materials, product homogeneity is serious. Fierce competition among ABS resin producers has led to a low capacity utilization rate. The price of ABS resin in China in 2016 dropped to a low level of the past decade or so. The competitiveness of ABS resin to other materials was therefore strengthened. The demand of ABS resin made a drastic increase and the operating rate of ABS resin units reached a new high of past years.
There were 11 ABS resin producers in China in 2016. All of them were foreign (including joint venture) enterprises and state-owned enterprises. There were 4 Taiwan-funded and Korean-funded (including joint venture) enterprises, including Ningbo LG Yongxing Chemical Co., Ltd. (800 kt/a), Zhenjiang Chimei Chemical Co., Ltd. (800 kt/a), Formosa Plastics (Ningbo) Co., Ltd. (450 kt/a) and CNOOC LG Chemical Co., Ltd. (150 kt/a) and their total capacity was 2 200 kt/a. There were 7 state-owned enterprises, including Jilin Petrochemical Co., Ltd. (580 kt/a), Tianjin Dagu Chemical Co., Ltd. (400 kt/a), Shanghai Gaoqiao Petrochemical Co., Ltd. (200 kt/a), Liaoning Huajin Chemical Co., Ltd. (190 kt/a), Daqing Petrochemical Co., Ltd. (100 kt/a), Lanzhou Petrochemical Co., Ltd. (50 kt/a) and Shanghai Huayi Group Corporation (38 kt/a) and their total capacity was 1 558 kt/a.
The ABS resin sector in China has a quite high concentration degree. The market is mainly monopolized by a few large enterprises. With the aggravation of market competition, ABS resin producers have concentrated their efforts on the development of ABS special materials in recent years. With impacts from various factors such as downstream demand and profit-earning ability, the operating rate of ABS resin in China is floating in a range of 60-85%. Investments in the ABS resin sector have gone up in recent years. New projects are mainly expansion projects launched by existing producers to enlarge scale, increase scale economics and strengthen competitiveness. There are also some new entrants such as Shandong Haili Chemical Industry Co., Ltd. and TRINSEO Petrochemical Co., Ltd. (The production is shifted from GPPS to ABS resin through renovation). It is expected that the capacity of ABS resin in China will reach over 4 500 kt/a in 2020.
Import amount is down, export amount is small
Owing to the increase of the supply amount and the slowdown of the demand growth, the import amount of ABS resin in China started to come down from 2012 and was stabilized at over 1 600 kt for long years. The import amount was around 1 690 kt in 2016. More than a half of ABS resin imported in China comes from processing trade with imported materials. These downstream users mainly depend on import and are not affected by the increase of the supply amount in the domestic market. Moreover, as ABS resin has many varieties and brands, there is considerable product differentiation and strong specificity. Enterprises in China usually produce conventional materials. Special materials have low output and incomplete variety. Great quantities of special materials have therefore to be imported from abroad. The export amount of ABS resin in China is very small, reaching only 20-50 kt in 2010.
ABS resin imported in China in 2016 mainly came from peripheral countries and regions in Asia such as Taiwan, Korea, Malaysia, Thailand and Japan. Taiwan and Korea were the major import sources and the amount imported from these two regions accounted for 86% of the total import amount.
Demand will still maintain a growth
The consumption of ABS resin in China was 4 800 kt in 2016, an increase of around 10% over the previous year. Main reasons for the rapid increase of the ABS resin demand are as follows. First, downstream sectors such as automobiles and household electric appliances have made a sound development. Second, the product price has become a key factor deciding the market competitiveness of ABS resin. From the second half of 2015 to the first 3 quarters of 2016 the price of ABS resin was at a low level of the past decade or so. The price advantage was evident. A massive replacement of related products such as modified styrene and reclaimed ABS was therefore made and the consumption of ABS resin was much higher than the previous year.
The consumption feature of ABS resin in China is that products made of ABS resin are highly concentrated in components of electric appliances. China has become a big country for the production and export of household electric appliances. The overall consumption structure of ABS resin will make no big changes in future. The consumption will still mainly be in electric appliances. It is expected that the demand of ABS resin in China will increase at an average annual rate of 4-5% during 2016-2020.
Despite the supply shortage, with impacts from imported materials competition in the market of ABS resin is fierce in China. ABS resin producers in China mainly produce conventional materials. The market of special materials and high-end materials is mainly occupied by imported products. The capacity of ABS resin in China is expected to have a rapid increase in next few years. Great quantities of imported products will however still swarm into China. Competition in the market of ABS resin and especially competition in the market of conventional materials will become all the fiercer.
