Since the fourth quarter, domestic acrylonitrile-butadiene-styrene copolymer (ABS) prices have been on a steady downward trajectory. Taking the mainstream grade 0215A in the East China market as an example, prices have fallen from RMB9,500 per ton in late September to around RMB8,000 per ton—the lowest point of the year. Overall, as the structural imbalance caused by capacity expansion remains difficult to resolve in the short term, ABS market prices are expected to continue their downward trajectory.
Increasing Supply Pressure
The ABS industry is entering another concentrated capacity expansion cycle in 2025. New facilities at Yulong Petrochemical and Daqing Petrochemical commenced operations in the second quarter, propelling the industry's first-half capacity beyond the 10-million-ton mark. The expansion pace accelerated further in the second half: Yike Chemical's first phase of 225,000 tons/year bulk polymerization ABS facility started up in July, while Jilin Petrochemical's new 400,000 tons/year emulsion ABS plant commenced operations in November, and its new 200,000 tons/year bulk polymerization facility entered the feedstock loading stage.
Annual ABS output is projected to approach 7 million tons, representing approximately 27% year-on-year growth. Amid pressure from low-priced supplies, manufacturers faced increased difficulty in moving inventory. Simultaneously, sluggish sales led to ABS inventories at most producers exceeding last year's levels. Notably, with most ABS plants operating under integrated configurations, industry utilization rates remained relatively high at around 70%, further exacerbating the supply-side surplus.
Looking ahead, the continuous output of new capacity will only intensify supply pressure. As year-end approaches, some manufacturers may step up shipments to meet inventory reduction targets, likely exerting further downward pressure on market prices.
Insufficient Cost Support
ABS's three core raw materials—styrene, acrylonitrile, and butadiene—all face a “strong supply, weak demand” dilemma, with prices at annual lows, weakening cost support for ABS.
Styrene capacity is projected to grow by 11.46% year-on-year this year, yet weak downstream consumption has led to inventory accumulation across the supply chain. In November, styrene hit a five-year low of RMB6,300. Although the market rebounded from this trough, it subsequently retreated slightly due to supply-demand imbalances and currently hovers between RMB6,450 and 6,550 .
The acrylonitrile market began a fluctuating decline after hitting a three-year high early this year. The core reason is that capacity grew over 20% year-on-year, while downstream demand growth was only 11.1%, highlighting a supply-exceeding-demand pattern.
Butadiene also showed weakness, with prices throughout the year below the past decade's average. The release of new capacity in the fourth quarter, coupled with concentrated arrivals of imported cargoes, intensified the supply-loose pattern, pushing prices to their annual low.
Although the collective decline in raw material prices has somewhat reduced ABS production costs, in a market environment dominated by supply-demand imbalances, the downward shift in costs has not established an effective bottom. Instead, it has provided room for prices to test new lows. The ABS industry's profit margins rapidly deteriorated from marginal profitability in October, with production losses now expanding to approximately RMB300 per ton. Given the lack of strong near-term positive factors in the upstream raw material market and the industry's own pronounced supply-demand imbalance, losses are likely to persist.
Weak Demand Growth
Downstream demand for ABS showed divergence but overall lacked sufficient support. In the key appliance sector, January-November production figures show: - Air conditioners: +1.6% YoY - Refrigerators: +1.2% YoY - Washing machines: +6.3% YoY - Color TVs: -2.7% YoY Despite sustained policy stimulus boosting appliance output and sales, growth lags far behind upstream capacity expansion, exacerbating supply-demand mismatches.
As a barometer of China's economy, the home appliance sector has underperformed expectations in recent years due to macroeconomic pressures, compounded by the fading real estate boom, significantly increasing growth challenges. Key indicators like national real estate investment and commercial property sales area plunged year-on-year from January to November, constraining growth potential in the home appliance market. Even with stimulus from national subsidies and major promotional events, large home appliance consumption remained sluggish, confirming weak terminal demand.
The ABS market exhibits some positive factors, with imports declining significantly year-on-year while exports maintain rapid growth. Customs data shows that in the first 11 months of this year, China's cumulative ABS exports increased by 71.58% year-on-year, while imports decreased by 16.33%, providing some relief to the domestic market. However, compared to the domestic total production capacity of tens of millions of tons, the year-on-year increase in exports of over ten thousand tons is insufficient to reverse the overall supply-demand mismatch.
The stark contrast between modest demand growth and massive supply expansion highlights a core structural contradiction. This dynamic makes it difficult for the ABS market to gain strong upward support in the short term, suggesting that the current adjustment trend is likely to persist.
As an integrated internet platform providing benchmark prices, on December 26th, the benchmark price of ABS, according to SunSirs, was 8200.00 RMB/ton, a decrease of 4.4% compared to the beginning of the month (8577.50 RMB/ton).
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