US Witnesses Continued Downturn in Demand for ABS and PC

The US acrylonitrile butadiene styrene (ABS) and polycarbonate (PC) markets are currently grappling with a sustained decline in demand that may reach its lowest point in 2024 after a challenging one-and-a-half-year period. This downturn in demand echoes the difficulties faced by chemical manufacturers globally, with the CEO of a prominent European chemical company noting that 2023 marked the lowest demand in the past two to three decades. Comparable declines were experienced in the aftermath of the 2008 financial crisis and during the pandemic, each lasting four quarters. The ongoing decrease in demand has persisted for six consecutive quarters, with projections suggesting a potential trough in mid-2024.

Numerous ABS and PC manufacturers anticipate demand levels to mirror those observed in the second half of 2023. Growth estimates for 2024 vary among companies, with many predicting volume increases ranging from 2% to 4%. However, a modest decline in U.S. economic performance is anticipated, reaching its nadir in the first quarter of 2024. Factors contributing to this outlook include the compromised energy security affecting the European economy and the added pressure from China's property crisis on consumer confidence, exacerbating deflationary pressures.

The decline in U.S. production is evident, with November's manufacturing PMI registering at 46.7, marking thirteen consecutive months of contraction. Given that the consumption of ABS and PCs is closely tied to production levels, a sluggish demand trajectory is anticipated until the first half of 2024. Additionally, the recovery of U.S. housing construction is not expected until 2025.

The global ABS and PC markets currently grapple with a surplus supply. Capacity expansion in Northeast Asia is outpacing demand growth, contributing to the imbalance. Specifically, ABS is set to witness a capacity increase of 2.503 million tons in 2024, following the addition of 2.270 million tonnes in 2023. In contrast, the U.S. operates as a net importer of ABS. For PC in 2024, a planned capacity increase of 331 thousand tons follows the addition of 428 thousand tonnes in 2023, both primarily in China. Earlier in 2023, China imposed anti-dumping duties on Taiwanese PCs, resulting in a marginal price increase and a significant decline in imports from Taiwan. The U.S., in this context, serves as a net exporter of PCs, currently shipping approximately 5 thousand tons per month to China. The surplus supply conditions are prompting rationalization measures, with companies like Trinseo and Sabic announcing production line shutdowns at their European plants.