High Costs vs. Low Demand: Deep Losses Become the Norm for ABS

The ABS sector Enters Its Darkest Period to Profitability

Looking back, the ABS sector once enjoyed a golden era. Data from the past decade shows that the sector 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 might 2018, a surge in production schedules to 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 general health crisis. Even with domestic ABS vegetation 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 to ABS came to an end, giving way to frequent losses. The sector 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 to the ABS sector 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 to extended periods—were unable to pass on cost pressures. Consequently, the ABS sector 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 sector's darkest period to profitability. (Source: JLC)