How Does the Home Appliance Industry Affect Plastic Demand?
Highlights: Plastic materials are widely used in many industries, and studying the consumption fields of plastics can be approached from a meso perspective. This article analyzes the demand for plastics from the home appliance industry. In the future, the home appliance industry will gradually develop towards lightweight and energy-saving, and the stimulation of policies will probably drive up the fresh demand and existing demand for plastic in the future.
Home appliance is one of the main downstream industry of plastic, accounting for about 10-20% of the annual consumption of plastics. Various components of home appliances are widely made of plastics, and many steel parts have been replaced by plastic products in home appliance markets. In terms of the types of plastics, most of the plastics used in home appliances are modified plastics, and the home appliance industry is also the largest consumer of modified plastics, accounting for about 35% of the total plastic consumption.
Plastic Application Fields
In recent years, China’s home appliance consumption has been transforming and upgrading continuously. The overall development of sectors such as refrigerators, washing machines and air conditioners has been positive, which has increased the demand volume and quality requirements for plastics. This led to a continuous increment in the consumption of plastics for domestic appliances in China. In 2022, the demand for plastic in the home appliance industry is estimated to be about 9 million mt, nearly doubling from 2018. Most of the thermoplastic plastics used in home appliances are general-purpose plastics, such as PP, PS, ABS, PVC, PE, etc. The engineering plastics used in home appliances mainly include AS, PA, PC, POM, PPO, PPS, PET, PBT, PMMA, LCP, PEEK, PSF, etc. Thermosetting plastics usually include phenolic plastics, aminoplastics, epoxy resins, etc.
Among all the plastics used in home appliances, PP is the most consumed, accounting for over 30% of the total plastic consumption in home appliances, surpassing PS and ABS. This is because PP performs well in strength, rigidity and heat resistance, and it also has low costs and a low density which facilitates modification and processing. Thus, PP is widely used in the production of home appliances. PS is widely used in TVs, refrigerators, air conditioners, etc. due to its excellent electrical properties. ABS has good wear resistance, strength and stiffness, with an annual consumption of millions of tons in home appliances, especially in large appliances, while the ABS consumption in small appliances such as hair dryers and electric irons is also relatively high.
The increase in home appliance sales in the first half of 2023 drives the demand for modified plastics.
In the first half of 2023, sales of large home appliances in China increased significantly compared to the same period last year. According to data from the National Bureau of Statistics (NBS), China’s color TV output was 93.177 million units from January to June 2023, up 3.69% Y-O-Y. China’s air conditioner output was 140.599 million units, up 14.79% Y-O-Y, and household refrigerator output was 47.387 million units, up 13.80% Y-O-Y. Sales of large home appliances ramped up, mainly as China’s domestic economy continued to improve, and the scale of the home appliance industry was expanded in H1, 2023. Besides, the development of society and the increase in household income also buoyed the demand for home appliances. In the first half of the year, the national per capita disposable income was 19,672 RMB, with a real growth rate of 5.8% after deducting price factors, stimulating the consumption of household products.
As the home appliance industry enters the development of intelligence, the popularization of smart home appliances and related technologies will continue to drive demand, thus driving production. In addition, policies have also stimulated the development of the home appliance industry. In December 2022, the State Council issued the Plan for the Expansion of China Domestic Demand Share (2022-2035) to increase smart home appliance consumption and promote the development of digital households. The trend of intelligence has become a new anchor for the development of the home appliance industry.
H1, 2023 Modified Plastics Consumption from Large Home Appliances
Looking at the demand for modified plastics in China’s four major home appliances in recent years, in the first half of 2023, the consumption of modified plastics in household refrigerators was estimated to be 1,130-1,420kt, and the consumption of modified plastics in television sets was estimated to be 180-930kt, and the consumption of modified plastics in air conditioners was estimated to be 560-1,410kt. It is calculated that the consumption of modified plastics in China’s four major home appliances is about 2,850-4,740kt, up 13.6% Y-O-Y. The consumption of plastics in refrigerators and air conditioners is relatively high. Based on the seasonal rule of home appliance production and the calculation of plastic consumption, the demand for modified plastics in the second half of 2023 is estimated to be 2,362-4,152kt.
Development of the home appliance industry drives plastic demand.
In addition to directly affecting the appearance parts and decorative parts of various home appliances, plastic materials are also applied to the packaging and film of home appliances. PS is usually used as packaging materials such as electronic products boxes, protective films, etc. PS has good toughness, impact resistance, and transparency, and is widely used in the packaging of mobile phones, televisions, displays, cameras, and other electronic devices. PE is a commonly used packaging material with excellent flexibility, compressibility, and wear resistance. It is usually used in the packaging of small electronic products such as mobile phone accessories, batteries, chargers, etc. PVC is a widely used low-cost material for packaging electronic products. It has high toughness, transparency, and weather resistance, and is widely used in the packaging of products such as mobile phone cases, headphone wires, power cables, etc. The home appliance packaging industry also drives the demand for plastics.
Looking ahead, the home appliance industry may further drive the demand for plastics. Firstly, there is the continuation of policies. In July 2023, the National Development and Reform Commission put forward policies related to restoring and expanding consumption, which includes facilitating home decoration consumption, promoting smart home appliances and integrated home appliances, and developing an intelligent and green home industry. The production and sales of smart home appliances may be driven, coupled with expectations for consumption growth.
At the same time, consumers show higher requirements for the quality of home appliances and increasing demand for intelligence and internalization. The replacement of outdated products with emerging high-quality smart home appliances will propel the existing demand for home appliances. Affected by policies on ensuring timely deliveries of presold homes, the improvement in completion data in the real estate industry props up the fresh demand for home appliances, with a stimulating effect accounting for about 20% of the incremental demand for home appliances. Lastly, as home appliances gradually move towards personalization, lightweighting and multifunctionality, the proportion of low-cost modified technology applications of plastics is expected to increase, making the home appliance industry a growth point for plastic demand.
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