ABS Downstream Demand Likely to Improve in June
In the first four months of 2022, the output of ABS downstream durable consumer goods showed a downward trend to varying degrees, affected by the limited transportation, insufficient supply and sluggish demand. Although the production of home appliances will enter a slack season in June, the consumption will likely rebound with the downstream capacity recovery in some areas and the implementation of stimulus policies.
As the downstream consumption of ABS is mainly concentrated in durable consumer goods, it rose greatly in Q2 of 2020 benefited from the recovery of China’s industrial chain. However, from H2, 2021, the demand for ABS was curbed by the overseas supply and declined consumption of durable consumer goods. In the first four months of 2022, the output of ABS downstream durable consumer goods showed a downward trend to varying degrees, affected by the limited transportation, insufficient supply and sluggish demand.
The largest proportion of ABS downstream demand is in the field of electronic appliances, which is dominated by air conditioners. In terms of monthly data, from January to March 2022, the output of air conditioners increased slightly both year-on-year and cumulatively. However, both year-on-year and cumulative declines began in April.
Due to the lack of incentives such as intensive consumption, the consumption of washing machines from 2021 can better reflect the actual rigid demand performance. In mid-2021, the output of washing machines showed a year-on-year downtrend in four months. Compared with the output of air conditioners, the year-on-year decline in the monthly output of washing machines in 2022 occurred in March 2022, one month earlier than that of air conditioners.
In 2020, the output of refrigerators saw a larger increment. Among the three major home appliances, refrigerator output has experienced the most monthly year-on-year declines since 2021. In 2022, both the year-on-year and the accumulative changes showed a downtrend.
In addition to the high consumption of ABS in the three major downstream products, the proportion of consumption in automobile is also relatively considerable. Affected by factors such as shortage of chips since 2021, the monthly output of automobile showed a year-on-year decline in nine months out of 16 months.
In late April, the General Office of the State Council issued the Opinions on Further Unleashing Consumption Potential and Promoting Continued Recovery of Consumption, which not only focused on the current recovery, but also focused on long-term potential, and launched 20 key measures in five areas. At the same time, many places have introduced a package of policies and measures to stimulate consumption, including issuing consumer coupons, holding consumption promotion activities, etc., as well as targeted industry stimulus plans.
In the later period, although the production of some home appliances will gradually enter the slack season in June, the production capacity is expected to improve with the recovery of downstream capacity in some regions. In addition, stimulus policies have been announced and implemented in succession in various places, and the momentum of consumption is expected to recover. However, it is worth noting that from the perspective of the attributes of consumer goods, the recovery of durable consumer goods consumption may be weaker than that of fast-moving consumer goods, so the downstream growth of ABS will still see uncertainties.
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