China’s home appliance sector recorded 2.64% year-on-year growth in the second quarter, latest China Center for Information Industry Development showed, amid a stronger-than-expected recovery in consumer demand after the coronavirus lockdowns of Q1.
The COVID-19 outbreak in Q1 saw home appliance sales fall 14.13% on year due to the closure of retail stores, logistics bottlenecks and end-user demand contraction amid the economic uncertainty.
As restrictions were eased and consumption stimulus plans launched in Q2, demand picked up steadily from April and peaked in June, when sales rose 9.8% on year, after a 4.3% year-on-year rise in May, the CCID data showed.
China registered positive year-on-year growth in large household appliance production in June, with around 8.9 million refrigerators produced in June, up 21.7% on year, and more than 16 million televisions, up 21.5%, National Bureau of Statistics data showed.
The rebound was fueled by a mid-year shopping festival promotion that triggered a domestic buying spree for consumer durables, market sources said.
This lent firm support to the Asian acrylonitrile-butadiene-styrene market, with China’s ABS producers increasing output from late April and continuing to operate at high rates in early Q3. Major domestic ABS producers have reported strong demand from electronic appliance producers and average operating rates at ABS plants have been hovering above 95% since May, market sources said.
Asian ABS prices hit an eight-month high on June 17 at $1,430/mt CFR China, with production margins calculated at $435.10/mt, before losing steam as home appliance sales cooled after the mid-year promotion ended.
ABS was last assessed down $40/mt month on month at $1,360/mt July 29, but with the profit margin after deducting production costs still calculated at $344.50/mt, a level deemed unusually high by the market.
The short-term outlook for ABS is for prices to continue weakening in Q3 amid seasonal weak demand for consumer goods and uncertainty arising from a recent global resurgence in coronavirus infections.
One market source said he expected ABS prices would be bearish in August when the market enters the off-season for both ABS and downstream home appliances purchases in China, which could prompt producers to trim operating rates.