China's plastics industry is rising strongly

As an important plastic category, ABS's production capacity has also increased - more than 1 million tons in 2004, 1.8 million tons in 2008, more than 3 million tons in 2012, and 3.7 million tons in 2016. In the long run, with the strong rise of China's ABS industry, this growth momentum will continue.

Currently, the global manufacturing center is moving to China. With the megatrend, the weight of China's ABS industry in the international market has steadily increased. According to authoritative statistics, China's ABS consumer demand has accounted for more than 50% of global demand. Correspondingly, the international discourse rights of Chinese ABS companies have gradually strengthened. In addition to the promotion from the global market, China's ABS industry itself has enormous potential for expansion.

At the technical level, although some products of some enterprises have become among the international leaders, there is still considerable room for improvement. Taking the ratio of plastic to steel as an example, the world average is 50:50, while Germany and the United States reach 63:37 and 70:30 respectively. China's plastic-steel ratio is only 30:70, waiting for the "salted fish to turn over."

A breakthrough in the automotive field. China's car ownership is about 200 million, the total is not low, but the number of thousand people is only 140, equivalent to Japan half a century ago, lower than the world average. It is foreseeable that China's auto industry will continue to advance. At the same time, China has set the goal of lightweighting cars. Under the requirement of “lightweight”, plastic substitute metal is inevitable. As the main force of “plasticizing steel”, the application prospect of ABS is bright.

The demand for ABS in home appliances is also huge. ABS resins have been widely used in televisions, refrigerators, air conditioners, and washing machines. On the other hand, in recent years, smart home appliances have exploded, and in the selection of materials, smart home appliances prefer ABS resin. The industry predicts that the market penetration rate of smart washing machines and refrigerators will increase from 13% and 3% to 45% and 20% respectively. By 2020, the overall output value of China's smart home appliances will exceed 1 trillion yuan. Such strong demand will definitely be transmitted to the ABS industry.

At present, China's plastic products manufacturing market revenue of 3.24 trillion yuan, accounting for 4.35% of the total GDP. According to industry estimates, the market capacity of China's modified plastics should be at the trillion level and will become a new growth point. This means that China's modified plastics industry, including ABS resin, will maintain a good upward trend.

Industry shocks, opening up the situation

Despite the good prospects, it should not be avoided that the current Chinese ABS industry has indeed experienced a major crisis.

In 2013, China's ABS capacity growth rate was close to 16%, but the growth rate in 2014 dropped to 4.27%. In 2015, production capacity is still growing, while output has experienced negative growth, down 5.66% year-on-year. The market stagnation has caused a large number of SMEs to fall into the trap of not being able to open the pot. In 2015, the overall operating rate of ABS companies was less than 63%, and the scenario was bleak. “The production capacity has obviously increased year after year, but the production quantity has slipped. Why is this? There are many reasons.

From a macro perspective, China's economic growth has been declining for many years, especially the decline in the real economy. Affected by this background, the pace of the plastics industry has slowed down and even experienced negative growth, which was originally reasonable.

From the perspective of the middle level, the country has vigorously promoted the adjustment of industrial structure in the past two years, and the ABS industry has also entered the consolidation stage. One of its specific performances is that the petrochemical manufacturers in the upstream of the ABS industrial chain have raised their prices substantially, causing raw material prices to skyrocket.

For example, in the past month or so, styrene has soared by more than 20%, once reaching 11,850 yuan / ton. Butadiene has risen by about 58% since the end of July this year. For the ABS industry, which uses styrene and butadiene as the main raw materials, their huge increase will undoubtedly constitute a huge cost pressure.

From a micro level, China's ABS companies themselves have many problems. On the quantity, there are about 3,000 modified plastics companies in China, most of which can produce ABS products. However, the annual output of over 10,000 tons is very small. In addition to the generally small scale, technological innovation capabilities and quality assurance capabilities are even more lacking.

All of these have led to a single and homogenized ABS production in China, which has made China's ABS industry lack of voice in the international market. It is also vulnerable to external environment and is eroded by other competitive categories.

However, dramatic changes at the macro and meso levels will or will have a profound impact on the micro level.

In the case of high raw material costs and a significant decline in the short term, ABS companies that are known for their low cost are facing an unprecedented dilemma. On the contrary, for companies that focus on R&D and long-term investment, this crisis is a breeding ground.

On the one hand, although the price increase of raw materials has also caused pressure, it has driven the workshop-style enterprises out of the ABS field and improved the industrial ecology to some extent. On the other hand, excellent enterprises have captured the downstream of the industrial chain, such as automobiles and home appliances. The sensitivity of the demand. And changes in these areas will create endless opportunities.

Obviously, with the rising cost of production and the increasingly urgent situation of technological innovation, China's ABS industry will be reshuffled.