By Lu Shulai, China Petroleum ABS Technology Center

China put forward the "double carbon" goal of achieving "carbon peak" by 2030 and "carbon neutralization" by 2060. The "double carbon" goal requires to take "double control" action, that is, the total amount and intensity of energy consumption should be controlled. ABS resin industry is closely related to the "double carbon and double control" policy. The production process of ABS resin industry has the characteristics of long process, lots of emission points and large emission. The long process means that every step of the production process needs to consume energy. Therefore, energy consumption means emission. At the same time, lots of emission points and large emissions leed to the problem of organic matter emission. Therefore the ABS resin industry will be greatly affected by "double carbon and double control" policy.

High profit and high start-up attract more capital to settle in

1. The market in 2021 was at a high level for a long time

In 2021, the price of ABS resin in China remained high for a long time (see Figure 1), and the annual price was RMB15 000-18 000/ton.

Figure 1 Price trend of domestic ABS market in 2021

Overall, the price of ABS in 2021 was determined by the relationship between supply and demand. The long-term high price of ABS resin was due to the strong market demand and the short supply of products, but it was not strongly related to the prices of acrylonitrile, butadiene and styrene.

Since October 2021, ABS prices showed a significant downward trend. The main reasons were due to the following three aspects: firstly, due to limited power supply, "dual control" and environmental supervision, downstream construction was limited; secondly, due to insufficient domestic demand, limited export orders and other factors, the downstream inventory was high; thirdly, the release of new production capacity increased market supply and exacerbated the contradiction between supply and demand.

2. Blowout growth of new domestic capacity

The industry performance of ABS resin with high profit and high start-up had driven more capital forces to enter the ABS industry one after another. In recent years, with the rapid development of large-scale refining, many new and proposed ABS plans were implemented. The current capacity of ABS in China is 4 115 000 t/a (see Table 1), while the capacity of new units in the next five years is expected to exceed 10 million t/a (see Table 2). It can be seen that the new capacity of ABS will exceed twice the existing capacity in the short term, which can be described as a blowout development.

3. Three factors boosted the rapid development of domestic ABS

There were three main reasons for the rapid development of China's ABS resin industry: firstly, China's rapid economic growth had implemented a series of reforms, such as the liberalization of crude oil import, the decentralization of examination and approval authority, and the relaxation of restrictions on foreign-funded oil enterprises, which had driven the rapid expansion of production capacity of the domestic oil refining industry; secondly, in 2015, China proposed to build seven petrochemical industry bases, and the construction of large-scale refining and chemical bases set off a climax; thirdly, in the context of transformation and upgrading, the oil refining industry implemented the strategy of "reducing oil and increasing chemical industry", which drove the rapid development of domestic chemical industry and new material industry. ABS resin  maintained high efficiency in recent years, so it became a popular choice for oil refining transformation and upgrading.

The industry will face multiple pressures and challenges

In the future, China's ABS industry will face two kinds of pressures and challenges: one is from the industry itself, mainly including supply and demand pressure, competition pressure and benefit pressure; the other comes from government policies, mainly including environmental protection pressure and "double carbon and double control" pressure. In addition, the development of ABS industry may also face some uncertain factors.

1. Pressure of supply and demand: due to the sharp increase and centralized release of ABS resin production capacity in the future, there will be a serious oversupply situation. Whoever can seize the market will become the winner of industrial development.

2. Competitive pressure: in the future, the competition in ABS market will be very fierce, which will form a disorderly situation in the short term, and the initial release of new capacity will cause the stage of low price competition.

3. Benefit pressure: fierce market competition is bound to lead to price decline and benefit decline, and some enterprises will face serious losses.

4. Environmental protection pressure: with the increasingly stringent national environmental protection policies, the discharge pressure of "three wastes" up to standard of ABS production enterprises increased sharply. In 2017, the emission standard of acrylonitrile changed from 22×10^-6 to 0.5×10^-6 reduced to 0.5×10^-6. At the same time, the pressure from wastewater and waste residue emission reduction is also very large. The industrial wastewater produced by emulsion method is inevitable.

5. "Dual carbon and dual control" pressure: under the strict requirements of "dual carbon and dual control", the energy consumption of ABS products will be an index that manufacturers must attach great importance to. Whether the quota limit of carbon emission can be reached will determine the vitality of ABS enterprises.

6. Uncertain factors: the development of any field will face many uncertain factors, such as epidemic situation, trade war, major security events, international political crisis and even war, which will have an unpredictable impact on the development of ABS industry.

Rely on technical means to meet industry challenges

Solving the pressure of "double carbon, double control" and "environmental protection" depends on scientific and technological innovation and technological progress. Fundamentally speaking, solving all problems depends on technical means.

Specifically, the countermeasures mainly include the following aspects:

Firstly, improve product quality. The ABS market is divided. The high-end depends on the quality and the low-end depends on the price. Only high quality can meet the needs of high-end users and expand the application field.

Secondly, to reduce production costs, manufacturers should constantly improve the level of process technology, reduce material and energy consumption, and improve the efficiency creation ability at low cost.

Thirdly, manufacturers should stabilize quality and ensure supply. Stabilizing quality and ensuring supply is even more important than improving quality, because it is really for the sake of users.

Fourthly, manufacturers should increase scientific and technological innovation. Only by relying on scientific and technological innovation and technological progress can manufacturers fundamentally solve the problem of "double carbon" and "double control".

Fifthly, improve service level. Technical service is a value-added service provided to users. In the future, technical service capability will become the core competitiveness of enterprises.

Sixthly, we should clarify the marketing strategy, accurately locate the market, vigorously expand sales channels and strive to build product brands.

Seventhly, we should reduce waste gas emissions. Only by increasing tail gas treatment and realizing the stable emission of VOCs, can enterprises have long-term vitality.