Production Scheduling Declines as Demand Weakens, 3S Market Awaits a Turnaround

Since the beginning of this year, China's home appliance exports have shown a "strong start followed by a slowdown" trend. Data from the General Administration of Customs indicate that in the first half of the year, home appliance export volume increased by 26.4% year-on-year, demonstrating robust performance, with leading enterprises generally achieving double-digit growth in overseas business. However, starting from July, export growth significantly decelerated, declining by 4.7% year-on-year. Production plans for categories such as air conditioners and washing machines have consecutively decreased for several months. Industry online data show that from September to November, air conditioner export production plans dropped by more than 7% year-on-year. This shift not only reflects high inventory levels overseas and cyclical declines in orders but also reveals deeper challenges such as weakening global demand and increased uncertainty in trade policies.

Meanwhile, the market trends of PS, EPS, and ABS—the "three S's," which are important raw materials for home appliance manufacturing—further confirm the weakness in end-user demand. Since August, the prices of the three S's have generally been under downward pressure, and corporate inventories remain high. Although raw materials such as styrene have once attempted to support prices, demand recovery has been slow, and bearish sentiment continues to spread in the market.

I. Structural Changes Behind Export and Production Scheduling Data

In the first half of the year, the high growth in home appliance exports was largely attributed to the restocking cycle overseas following the pandemic and the efficient operation of China's supply chain. Companies like Midea, Gree, and Haier saw significant increases in overseas revenue, and the proportion of exports from their own brands has been continually rising, demonstrating strong international competitiveness. However, this growth momentum is weakening.

The main reasons are that overseas inventories remain at a high level, and after concentrated restocking in April, channel inventories still need time to be digested. At the same time, last year’s export growth was high in the same period, putting pressure on year-on-year data. In addition, uncertainties in U.S. tariff policies and sluggish demand recovery in the European market have jointly led to a slowdown in the return of orders, with export growth entering a temporary plateau phase.

2. Three S Markets: Viewing the End Market from the Raw Materials, Demand Has Yet to Improve

As key raw materials for home appliance manufacturing, the market trends of the three S materials serve as an important indicator for observing the prosperity of the home appliance industry. From August to early September, the prices of PS, EPS, and ABS generally fluctuated downward. Although crude oil prices occasionally rebounded and maintenance of some facilities caused short-term disturbances, demand failed to provide effective support. Downstream home appliance manufacturers remain cautious in purchasing ABS, and industry inventories continue to accumulate. Data shows that by early September, the price range for domestic ABS materials had fallen further to 8,900-9,600 yuan/ton. The finished product inventories of the three S companies remain high, and market confidence is generally insufficient. Although PS has seen a slight recovery in profit margins, supply has increased while demand recovery remains limited, with the market mainly driven by rigid demand procurement. EPS has experienced a slight rebound in construction insulation and packaging demand, but remains weak in the home appliance sector, maintaining an overall loose supply and demand pattern.

3. Future Market Interpretation: Seeking Structural Opportunities Within a Weak Equilibrium

Looking ahead, the home appliance export and the "three S" markets will continue to face a situation of "weak supply and weak demand" in the short term. The overseas destocking cycle is ongoing, and some domestic home appliance enterprises have switched from "sprint mode" to "smooth transition," resulting in cautious production planning and shrinking procurement. However, there are still positive factors in the market: styrene prices are already at a low level, with some facilities planning maintenance, so there is limited room for further steep declines; the traditional peak season of "Golden September and Silver October" is still expected to drive some domestic demand recovery, and as the impact of high temperatures weakens, demand for insulation materials in northern China may gradually pick up; China's supply chain stability still holds a comparative advantage, and in the medium to long term, order inflows are a high-probability event.

From September to October, the overall price of the three S products is expected to continue a narrow fluctuation trend. ABS may gradually bottom out due to ongoing losses, while PS and EPS might slightly recover with the phased rebound of styrene, although the extent is limited. A genuine trend recovery still requires signals of overseas demand recovery and substantial boosts from domestic real estate and consumption policies.

Author: Zhuansusijie Market Research Expert Zhao Hongyan