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ABS Resins - Appliances and electricals/electronics will continue to be the major end-use segments

Introduction

ABS is co-polymer of Acrylonitrile, Butadiene, and Styrene (Raw material used for ABS production). Acrylonitrile is a synthetic monomer produced from propylene and ammonia; butadiene is a petroleum hydrocarbon obtained from butane; and styrene monomers, derived from coal, are commercially obtained from benzene and ethylene from coal.

Acrylonitrile-butadiene-styrene (ABS) is the largest-volume engineering thermoplastic resin, offering an excellent balance of heat, chemical, and impact resistance with superior processing versatility. Large-volume applications for ABS resins include appliance parts, electronic/electrical, and transportation (automotive) end uses. ABS resins are frequently used in polymer blends for many different applications, to achieve the best of all properties from the combined product.

Features of ABS resins:

Medium Strength; Tough, hard and rigid; Good Chemical resistance; Dimensional Stability; Creep Resistant; Electroplatable; Outstanding formability; Very high impact strength; High tensile strength and stiffness; Excellent high and low temperature performance; Resistant to many plasticizers; Excellent ductility.

Advantage of using ABS resins:

ABS resins are highly resistant and tough; It can be modified; Its resistance can be amplified; Its Impact resistance does not fall off rapidly at lower temperatures; Its stability under load is excellent with limited loads.

Limitations:

It has a poor weather ability; It is also a poor solvent resistant and generates high smoke when burnt.

Derivation

ABS is derived from acrylonitrile, butadiene, and styrene. Acrylonitrile is a synthetic monomer produced from propylene and ammonia; butadiene is a petroleum hydrocarbon obtained from the C4 fraction of steam cracking; styrene monomer is made by dehydrogenation of ethyl benzene — a hydrocarbon obtained in the reaction of ethylene and benzene.

ABS combines the strength and rigidity of acrylonitrile and styrene polymers with the toughness of polybutadiene rubber. While the cost of producing ABS is roughly twice the cost of producing polystyrene, it is considered superior for its hardness, gloss, toughness, and electrical insulation properties.

ABS is easily machined. Common machining techniques include turning, drilling, milling, sawing, die-cutting and shearing. ABS can be cut with standard shop tools and line bent with standard heat strips. ABS can be chemically affixed to itself and other like-plastics

Applications

ABS's light weight and ability to be injection molded and extruded make it useful in manufacturing products such as drain-waste-vent (DWV) pipe systems, musical instruments (recorders, plastic clarinets, and piano movements), golf club heads (because of its good shock absorbance), automotive trim components, automotive bumper bars, medical devices for blood access, enclosures for electrical and electronic assemblies, protective headgear, whitewater canoes, buffer edging for furniture and joinery panels, luggage and protective carrying cases, small kitchen appliances, and toys, including Lego and Kre-O bricks. Household and consumer goods are the major applications of ABS Keyboard keycaps are commonly made out of ABS.

Advent of many industries, such as electronics and consumer appliances, paved way to their production. Based on the grades of ABS commercially available, the resins market is classified as high gloss and low gloss. These resins best serves in manufacturing products such as pipes, faucets, automotive body parts, golf club heads, protective head gear, toys and so on. Furthermore, it find its major application in consumer products such as kitchen appliances, housing products, and so on. ABS resins have a strong resistance to corrosive chemicals and have low melting temperature. Moreover, it is also relatively inexpensive and it typically falls somewhere between Polypropylene (PP) and Polycarbonate (PC). All of these characteristics lead to these resins being used in a large number of applications across a wide range of industries.

Global Market

Global ABS market is valued at US$ 23 bn in 2016. China continues to drive the ABS resin market, with more than one-third of global capacity and more than half of global consumption in 2016. The migration of manufacturing of electronic/electrical, appliances, and other markets to China over the years has resulted in increased ABS demand in the country. The appliance market in China will continue to grow as the middle class population grows, since this emerging group purchases more durable goods that use ABS resins.

The following pie chart shows world consumption of ABS resins in 2016:

Global market by applications

World consumption of ABS resins is led by appliances and electronic/electrical applications, accounting for more than two-thirds of total world ABS resin consumption in 2016. The next-largest end use for ABS resins is in the transportation sector (automobiles). Electronics uses will grow at more than 4% per year, while appliances and transportation uses will increase at 3–4% per year through the forecast period.

Although the average annual growth in consumption during 2011–16 was less than 2.5%, the next five years look more promising in terms of demand, with a forecast growth rate of about 3.7% per year. China is expected to represent about 65% of the additional volume; the Indian Subcontinent, the Middle East, and South Korea are also expected to witness strong growth. Western Europe, North America, and Japan are mature economies, exhibiting modest growth rates of less than 2% per year in the next five years.

The ABS resin market is currently oversupplied. Global capacity increased during 2011–16 at a rate of 4.0% per year compared with consumption growth of 2.3% per year; this resulted in a near six percentage point drop in operating rates. However, stronger demand prospects and a lower capacity addition rate (1.5% per year) during 2016–21 are expected to improve global operating rates by 2021.

Global market by region

Asia Pacific region accounts for the largest market share. It is expected to be the fastest growing one, witnessing a CAGR of 7-8%, on account of the growing middle class population in the region. Asia-pacific market is dominated by the China, which accounts for over 75% of the Asia Pacific’s market share by volume. North America and Europe markets are expected to grow at a considerable slower rate, due to the stagnant growth in the end-user industries.

The appliances and electronics & electrical applications, have the largest share in the market collectively accounting for about 65% of the global share, by volume. This is followed by the automobile sector. The automobile segment is expected to be the fastest growing segment during the forecast period, driven by the growing automobile sector. The construction sector is expected to witness a stable growth rate.

Factors impacting demand for ABS

Rising importance of light weight automobiles on account of better fuel efficiency is expected to increase product’s application scope. Recent developments in the Corporate Average Fuel Economy (CAFE) have forced automobile manufacturers to seek new ways to reduce fuel consumption which will have a strong impact on the industry over the next few years.

The presence of functional substitutes such as PEEK and SBR is expected to challenge industry development over the near future. Over the past few years, acrylonitrile butadiene styrene has replaced a variety of conventional materials including metals, wood, nylons and ceramics. However, application growth of bio-based polymers in light of rising concerns regarding greenhouse gas emissions is expected to remain a restraining factor over the next few years.

Competitive Insights

The acrylonitrile butadiene styrene market was dominated by major players including LG Chemical, Chi Mei Corporation, Styrolution, Formosa Plastic Company, Kumho Petrochemical Company. In March 2015, Ineos announced the merging of its ABS business with its subsidiary Styrolution.

Establishment of strategic partnerships with buyers and increasing expenditure for the development of new products are expected to remain critical success factors for the industry over the next seven years. Application growth of the product in various end-use industries including automotive, construction and electronics in Asia Pacific, particularly China and India is expected to force manufacturers to establish their production units in the vicinity. This move will have a positive impact on the ABS sector over the next few years.

Indian Market

ABS in India is manufactured by two companies INEOS Styrolution India Ltd and Bhansali Engineering Polymers Ltd. with combined capacity of 190,000-tons. (80,000-tons by BEPL and 110,000-tons by INEOS Styrolution India Ltd.

Production of ABS in India has increased from 89,000-tons in 2011-12 to 120,000-tons in 2016-17.

Bhansali Engineering Polymers (BEPL) was incorporated on 9 Apr.1984 under the name Bhansali Steels. It changed its name to Bhansali Engineering Polymers on 4 Jan.1986 by setting up a project for the manufacture of acrylonitrile butadiene styrene (ABS) resins.

BEPL has increased its capacity from 51 KTPA to 80 KTPA as of FY17 and plans to increase it further to 137 KTPA by end of Dec 2018.

The Company's plants are located at Satnoor, MP and Abu Road, Rajasthan. HRG (high rubber graft – Rubber rich ABS) is being manufactured in Satnoor, MP whereas bulk SAN and compounding production units are located at ABU Road, Rajasthan.

The initial plant capacity of BEPL was only 6 KTPA which was subsequently expanded in a phased manner and today the company’s plant capacity to manufacture ABS stands at 80KTPA at two locations. This was possible because the company not only absorbed Japanese technology but adapted it with the changing requirement of new grades with wide ranging product specifications to cater to the emerging new market segments. Moreover, BEPL took over the two ABS manufacturing units one located at Baroda and the other at Abu Road in the year 1999 and 2003 respectively. Thereafter, it transferred the Baroda plant to Abu Road in order to rationalize the manufacturing pattern based on adapted technology to produce HRG at Satnoor and at Abu Road continue to manufacture SAN and ABS through mass polymerization and extrusion compounding processes.

BEPL has long term plan for organic growth – to set up a port based greenfield plant of minimum 200 KTPA by March 2022.

Considering the scope and limitation, opportunity and threat and also after in-depth evaluation, BEPL has decided to set up a port based green-field plant with a minimum capacity of 200 KTPA in the state of Gujarat to be commissioned by 2022. The new plant will be based on state of the art technology from Japan and in this connection, the substantive initial steps have already been taken involving several round of meetings with the Japanese company followed by visit of their experts.

INEOS Styrolution India Ltd.

IN EOS Styrolution India Limited (formerly known as Styrolution ABS (India) Ltd.) is the leader and number one producer of ABSOLAC (ABS) in India. The company is also a leading manufacturer of ABSOLAN (SAN) which is a polymerized plastic resin produced from Styrene & Acrylonitrile, and mainly used for products such as lightings, stationeries, novelties, refrigerators and cosmetic packing. Effective March 31, 2016, Styrolution India Pvt. Ltd. has merged with IN EOS Styrolution India Ltd., bringing the Polystyrene business to the company''s product portfolio. Local production of ABS is not sufficient to meet the local demand. Due to this reason the demand-supply gap is being fulfilled through import. Imports of ABS in India are in the region of 80,000-tons and demand is around 200,000-tons.

The demand for ABS in India is largely reliant on two sectors namely – Appliance & Automobile. Thus, the demand variance in the above sector affects the consumption of ABS.

The gross turnover of automobile manufacturer in India is being said to be the fastest growing segment where, by 2020, India’s share in the global passenger vehicle market is being projected to touch 8 per cent from 2.40 per cent in 2015, Two wheeler production to rise from 19.9 million in FY17 to 34 million by FY20E, Passenger vehicle production to increase from 3.7 million in FY17 to 10 million in FY20E. This will cater to higher demand in the near future.

Indian Auto Component Industry can be broadly classified into the organized and unorganized sectors. The organized sector caters to the Original Equipment Manufacturers (OEMs) and consists of high-value precision instruments while the unorganized sector comprises low-valued products and caters mostly to the aftermarket category. The Indian Auto Component industry is expected to grow by 8-10 per cent in FY 2017- 18, based on higher localization by Original Equipment Manufacturers (OEM), higher component content per vehicle, and rising exports from India, as per ICRA Limited.

There is a huge opportunity for the companies to exploit the untapped market as the demand for ABS market registered a growth of around 15%. Renewal of contract for import substitution of Refrigerator being imported from Korea is a trigger for the entire industry. Refrigerator manufacturers are likely to convert to ABS liners, hence the demand for ABS is likely to witness a jump in the coming year translating into a wide opportunity to players in the industry to grab the surging market demand of ABS through its expansion etc. and enhance its market share.

ABS demand in India is expected to grow strongly at 10%, owing to the growth in the Indian middle class expenditure in home appliances and automobiles, which will drive the core demand for ABS.

The appliance sector will continue to be the largest ABS end-use market. Demand for ABS registered a healthy growth of 10% in 2016-17 and expected to continue to grow around 10% till 2021-22.**

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