Profits in ABS, PS and EPS Industries Come Under Pressure in H1
In the past three years, the profits in China’s ABS, PS and EPS industries showed a continuous narrowing trend. According to statistics, from January to June 2024, the average gross profit from PS production was RMB 27.4/mt, an increase of RMB 131.33/mt compared to the second half of 2023 and a Y-O-Y increase of RMB 16.67/mt compared to the first half of 2023. The average gross profit from EPS production was about 104.47/mt, an increase of RMB 50.22/mt compared to the second half of 2023 and a decrease of RMB 30.49/mt compared to the first half of 2023.
The average profit from ABS production from January to June 2024 was RMB -913.99/mt, down RMB 249.21/mt from H2, 2023 and down RMB 876.54/mt from H1, 2023.
In terms of costs, the average price of spot styrene in Jiangsu in the first half of 2024 was RMB 1,036.99/mt higher than that in the first half of 2023. Compared to the second half of 2023, the price has increased by RMB 717.19/mt. As a result, the average cost of styrene in the ABS, PS and EPS industries in the first half of 2024 showed significant increases. However, due to the temporary supply contraction in the PS industry, PS prices increased more than costs from March to May, and profit margins quickly recovered.
The upstream of ABS, in addition to styrene, also includes two major products: butadiene and acrylonitrile, which differ from the PS and EPS industries. In the first half of 2024, the increase in ABS prices was lower than that of the upstream styrene and acrylonitrile markets, resulting in increased cost pressure.
On the supply side, the output of ABS, PS and EPS trended up. The PS industry turned losses into gains in H1, 2024, and the EPS industry maintained a thin profit, but the ABS industry still suffered losses. Supply change was also an important factor influencing the profits. Although new capacity in the PS industry continued to be released, the actual increase in output was relatively limited, which to some extent alleviated the pressure of industry losses. Especially in March and April, which coincided with the peak season of demand, the demand for specialized materials from home appliances such as refrigerators and air conditioners increased. Therefore, there was once a structural supply tightness. Until the end of March and the beginning of April, the GPPS industry gradually turned losses into profits. The EPS industry had relatively flexible unit operations. In addition, regional supply shortages caused by unplanned shutdowns facilitated producers to hold firm offers. In 2024, the ABS industry was still in the peak period of capacity expansion. Although some new units were delayed in production due to the higher loss pressure, the demand growth rate still fell short of supply growth.
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