Since the outbreak of tensions in the Middle East, prices for chemical raw materials have largely risen in tandem with crude oil. However, with end-user demand remaining sluggish, ABS producers have struggled to pass on cost pressures, leaving them mired in deep losses. This was particularly evident during the July–August period; while demand was seasonally weak, raw material prices remained strong. Although ABS manufacturers managed to lower inventory levels through production cuts and shutdowns—driving up ABS prices—the price increases failed to keep pace with raw material costs, causing losses to widen progressively. In late August and early September, renewed US-Iran tensions triggered a sharp rise in the prices of raw materials like styrene and butadiene. Despite continued production cuts, and even with manufacturers aggressively raising prices, the industry remained unable to escape its state of deep financial loss.
The ABS Industry Enters Its Darkest Period for Profitability
Looking back, the ABS industry once enjoyed a golden era. Data from the past decade shows that the industry remained largely profitable prior to 2023, with only brief, sporadic periods of loss. Two periods, in particular, saw exceptionally high profits. From November 2016 to May 2018, a surge in production schedules for home appliances and automobiles led to a marked shortage of ABS; average monthly profits exceeded RMB 1,000 per tonne, peaking at over RMB 4,000 per tonne in December 2017. The second period occurred in 2020–2021, driven by "revenge spending" following the public health crisis. Even with domestic ABS plants operating at full capacity—or even overloading—market supply remained tight, allowing manufacturers to reap rewards in both profit and sales volume; during this time, daily profits peaked at over RMB 8,000 per tonne.
After 2023, the era of high profitability for ABS came to an end, giving way to frequent losses. The industry entered a cycle of rapid capacity expansion, with capacity exceeding 10 million tonnes by 2025. This hyper-speed expansion transformed ABS from a product in short supply to one of oversupply; intensified competition ensued, and corporate losses became a frequent occurrence. Driven by government subsidy policies, a rise in the production and sales of downstream home appliances and automobiles generated a period of modest profitability for the ABS industry between the fourth quarter of 2024 and 2025. However, the situation shifted in 2026 as downstream production and sales declined; this downturn was compounded by frequent disruptions to commodity markets caused by the outbreak of conflict between the US and Iran. Caught in a struggle between high costs and weak demand, petrochemical manufacturers—despite frequently cutting output or even halting production for extended periods—were unable to pass on cost pressures. Consequently, the ABS industry plunged into a state of deep losses in the second half of 2026, with deficits reaching as high as 1,000 to over RMB2,000 per ton, marking the industry's darkest period for profitability. (Source: JLC)
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