The Past And Future Of Spandex

Market Review

　　 In the first half of 2021, the spandex market as a whole shows an upward trend. The market price of spandex 40d was 72500 yuan / ton, up 154.39% year-on-year. In the first half of 2021, the average price of 40d spandex is 59053 yuan / ton, with a year-on-year increase of 102.22%.

The price rise of spandex is mainly driven by supply and demand and cost, and the change of import and export situation also promotes the price of spandex to a certain extent.

1、 Supply side

In the first half of 2021, spandex output was 395000 tons, an increase of 14.16% over the same period last year. From the perspective of several major spandex producers, Huafeng Chemical, Taihe new materials (Ningxia), Taihe new materials (Yantai) and Xinxiang Bailu are expected to put into production 40000 tons, 30000 tons, 15000 tons and 30000 tons respectively in the second half of 2021. Huahai spandex is expected to be put into production in 2021-2023, while Huafeng Chemical is expected to put into production 50000 tons and 150000 tons respectively in 2023 and 2025.

From the perspective of production and start-up, the overall start-up and production in 2021 are on the high side in recent years. In the first half of 2021, there is no new production capacity of spandex, and the domestic spandex production capacity is about 895000 tons. The profit of the factory is good, and the enthusiasm of enterprises to start production is good. The output from January to June in 2021 increases by 14.16% compared with the same period of last year.
2、 Demand side

In April, the market acceptance of high price spandex declined, showing a slight downward trend. In addition, the upstream BDO, pure MDI and other raw materials fell sharply, and practitioners were bearish on the future weaving Market, which led to a downward trend in the price of spandex. However, at the beginning of May, the domestic market price of spandex showed a slight upward trend. Near the end of May, the rising trend was more and more obvious. The price rise of spandex is inseparable from the demand driven support. The market is short of spandex fine denier goods, and the low factory inventory drives its price further. At the same time, with the continuous improvement of living consumption level, the pursuit of textile clothing quality is also improving, consumers demand more and more sports, leisure clothing, clothing function requirements are higher and higher. The consumption of spandex in all kinds of textile clothing also has the trend of gradual increase. According to the trend of the market, elastic fabrics are selling well in the near future. Some silk like fabrics with old varieties and no superior conditions will be eliminated by the market. It is precisely because of this that spandex, as the raw material of elastic fabric, has no alternative competition in the market, and the factory's offer continues to rise. Secondly, the current global epidemic situation has not been fully controlled, and the demand for anti epidemic materials such as masks, protective clothing and medical bandages will also increase in the future.
3、 Cost analysis

Cost drives up the spandex market.
In early 2021, the main reason for the price rise of spandex is the cost. The domestic BDO market in the upstream of spandex rebounded strongly after reaching the bottom in the second half of 2020, reaching the high level of nearly 12 years, with an increase of nearly 300% in the last half year. Three main reasons are summarized

1. Shortage of supply: due to the impact of the epidemic situation, many foreign BDO factories shut down, and then they purchased raw materials and PTMEG products from China. Foreign orders increased, while domestic BDO plants shut down for maintenance. At the beginning of 2021, a number of units were shut down for maintenance or replaced with catalyst, which led to production failure. In addition, due to the impact of Xinguan epidemic in some areas since January, logistics transportation is limited and freight is rising, resulting in delayed order delivery. As a result, China's BDO supply is in short supply, supporting the price rise.

2. Good demand: after October 2020, the textile demand will pick up, and the production and sales of PTMEG spandex industry chain will increase steadily. As the largest downstream industry of BDO, PTMEG will also increase the consumption of raw materials. Other downstream industries are also developing healthily, and the demand is increasing. At the same time, the demand of the black horse PBAT industry, driven by the National Plastic restriction policy, has increased sharply, thus increasing the digestion capacity of raw materials.

3. Bidding price promotion: in September 2020, the domestic BDO industry began to implement online auction mode, which was relatively high after each auction, boosting the confidence of the operators. Due to the shortage of supply in the market, the bidding price of the industry has been pushing up the market all the way, and at the same time, it has also stimulated the mentality of downstream buyers to make up positions in the market.

The sharp rise in BDO prices has led to a substantial increase in the entire industrial chain. Driven by BDO, the overall trend of PTMEG, the main raw material of spandex, has been steadily rising. The pure MDI market has gradually entered the market with terminal demand, and the supply gap is still obvious. Pure MDI also ushers in a substantial rise after the Spring Festival. As of March 3, 2021, PTMEG rose by 20200 yuan / ton, or 102%, and pure MDI rose by 7000 yuan / ton, or 32.56%, during the year. Under the strong cost support, the price of spandex gradually climbed to a high level.
4、 Import and export analysis

From January to may 2021, the cumulative import of spandex is 11500 tons, which is 29.10% higher than that in 2020 and 6.85% higher than that in 2019.

From January to may 2021, the cumulative export of spandex is 40500 tons, which is 58.27% higher than that in 2020 and 47.54% higher than that in 2019.
In the first half of 2021, Turkey, Brazil and Egypt are the top three countries in China's nylon filament export countries, among which Turkey accounts for a large proportion, accounting for 28.11% of the total export. Brazil accounts for 6.3%, and there are 90 spandex exporting countries, among which the top 10 exporters account for 73.5%.
5、 Inventory data analysis

In 2021, the spandex factory inventory will decrease from 17 days at the beginning of the year to around 10 days, 37 days less than the same period in 2020. In 2021, spandex factory inventory continued to decline, until the end of June, the industry reached the low level within the year, most of which were coarse denier inventory, and fine denier supply was in short supply. Short term spandex was supported by weaving demand, and the inventory level was expected to remain at a low level.

In 2021, spandex inventory remained at a relatively low level in the same period of recent years. Since October last year, a large number of orders for terminal footwear, clothing and home textiles were issued, and the weaving start-up showed a historical high. The demand for raw materials for stock was once rising. Most of the spandex had been stocked, but the inventory at the beginning of the year was relatively low. In the first half of the year, the overall demand for spandex remained stable in the downstream users, Spandex Enterprises under high load operation, inventory is still low.
6、 Profit analysis from January to June 2021

From January to June 2021, the price of spandex rises rapidly and the overall profit is fair. Taking 40d as an example, the average cash flow in the first half of the year was 13735 yuan / ton, an increase of 947% year-on-year. After the Spring Festival, the price of spandex remained high, and the price of spandex rose again in June. However, according to the rough calculation, the profit situation of spandex in the first half of the year was still good, far higher than that of the same period last year.

7、 Trend analysis and forecast from July to December 2021
The overall start-up of spandex remained high, and the output supported by demand also remained high in recent years. In 2021, the new production capacity was limited, mostly concentrated in the second half of the year, and the subsequent supply may be slightly relieved. In the short term, the spandex output is expected to maintain the current level in July. With the release of new production capacity, the supply tends to increase.

Global chemical fiber terminal consumption is steadily recovering from the bottom of the impact of the epidemic. From January to may, the retail sales of shoes, hats and knitwear were 555.22 billion yuan, with a year-on-year increase of 37.45% in 2020 and 1.74% compared with that in 2019. From January to may, domestic clothing retail increased by 34% year on year in 2020 and 5.16% compared with that in 2019. In the second half of the year, there are many festivals such as Thanksgiving and Christmas in foreign countries, and there are also large-scale activities on October 1 in China. Therefore, both domestic and overseas chemical fiber industry chain have good expectations. Under the background of low inventory of domestic and overseas chemical fiber industry chain, the impact of the follow-up epidemic will gradually weaken, and the terminal demand is expected to significantly improve, which will bring the global chemical fiber industry chain replenishment demand.

In the near future, the bottom of the cost side of spandex has been adjusted back, and there is more support in the future market. When the downstream demand is expected to be good, spandex is expected to maintain a high business cycle, and the demand side will push the superimposed supply slightly. The spandex market may continue to run at a high level in the second half of this year. There is no lack of concern that the market will fall for a long time. However, at present, the market is mainly consumed with low price spandex due to the short stocking cycle of spandex fine denier products. Driven by low inventory in the future market, the price is still expected to rise slightly. The new capacity is limited and the market just needs to be maintained. It is expected that the 40d spandex market will make an impact on 80000 yuan / ton or above in the second half of the year.

Information source: Longzhong information