ABS demand continues to ebb in China as over 50% toy exporters shutdown

16-Oct-08

Weak demand from China's toy sector (a major end-user of acrylonitrile-butadiene-styrene (ABS)) has had a drastic impact on ABS market across Asia. The reason for weak demand has been diminishing exports. The first seven months of the year witnessed 3,631 (52.7%) of China's licensed toy exporters going out of business- most with annual exports not exceeding US$100,000, as per data by China's General Administration of Customs, according to a Xinhua newspaper report. 600 had their export licences revoked on safety or quality grounds by the General Administration of Quality Supervision. Though yoy volume of toy exports increased 1.3% in the first 7 months, exports increased 23.1% yoy in that period from 2006, inferring a slowdown in growth by 21.8% between the comparable 2007 and 2008 periods. Several factors have been responsible for this : * The rapid rise of the yuan against the dollar that made exports less competitive * Higher wages and production costs * A decline in export rebates, changes in export policies and quality standards * Global recall of several Chinese-made toys on safety grounds and trade protection Major ABS producers in Korea, Taiwan and China are currently running plants at 50% capacity, market sources said. South Korean major Cheil Industries is running its 450,000 tpa ABS unit at Yeosu below 40% capacity after shutting for two days end-September to reduce inventory, as per Platts.