Recently, news of the collapse of spandex has been coming one after another, but it is true that since late August, the trend of spandex has begun to weaken. As the overall downward trend of downstream weaving operations has become more obvious, demand has weakened, and supply has eased, the market price of spandex has indeed increased. In order to understand the various degrees of decline, let’s briefly discuss it from three aspects: cost changes, own supply and demand, and downstream weaving market conditions.
Costs are strong, upstream and downstream support each other
Figure of domestic BDO Market price trend chart
Source: Longzhong Information
When it comes to the upstream of spandex, we have to mention the key driving role played by BDO. As can be seen from the above figure, since January this year, the price of BDO has risen rapidly, which is the trigger for the rapid price increase of its downstream products. The market has experienced a “roller coaster” all the way. After the second wave of surge in July, in August The BDO market is mainly affected by the changes in supply-side construction and the transmission of costs to the downstream terminals, which affect the purchasing and sales mentality of the industry. The market first rose and then fell. In the market outlook in September, BDO equipment is undergoing maintenance, supply-side benefits are gradually emerging, and the factory’s price-keeping mentality continues. However, the demand has slightly decreased, the ability to accept the current high BDO prices is still limited, and the follow-up of spot purchases has been slow. The domestic BDO market may still be dominated by a slow downward trend in September.
Graphic spandex raw material price trend
Source: Longzhong Information
As mentioned above, BDO started to fall again after the second round of surge this year, but the trend of PTMEG this year The overall level is maintained at a relatively high level, and there is no sharp rise or fall like BDO. As the main raw material of spandex, PTMEG has already formed a mutually supportive pattern with spandex. The spandex production is at a high level and the supply continues to be in short supply. The demand for PTMEG is also stable and biased. High. Currently, some PTMEG factories are undergoing maintenance, and suppliers continue to offer high prices. BASF raised its quotation to support the market, and other factories planned to follow suit. The focus of negotiations was upward. (Price reference: Domestic 1800 molecular weight loose water offers in the spandex field are concentrated at 47000-49000 yuan/ton; actual negotiations refer to 46000-48000 yuan/ton)
Pure MDI fluctuates slightly. Like the trend of BDO, there were two rounds of surges during the year, and it began to continue to decline again in mid-July. The price also fell from 25,000 yuan/ton to the current 23,500 yuan/ton, with the lowest level in 2021 being 18,400 yuan/ton. As low prices continue to fall, MDI demand-side product prices have fallen close to terminal psychological expectations, leaving some reversal capabilities. The current domestic pure MDI market is weak and difficult to change, and the market continues to dip into the bottom. Pay attention to the continued collection of supplies and the consumption of finished products on the downstream demand side.
Overall, in the spandex upstream raw material market, PTMEG is consolidating at a high level and pure MDI is running weakly. Under the current high profit situation of spandex, the cost side has little influence on it for the time being, but A pattern of mutual support between spandex and raw material prices has been formed. If the price of spandex drops sharply, subsequent cost support will become more obvious, and the current support role remains stable.
Light demand and loose supply
Figure 2019-2021 Spandex Monthly production comparison
Source: Longzhong Information
Since 2021 , the spandex factory was fully operational, with an average annual operating capacity of 89%, an increase of nearly 7% from the average annual operating capacity in the previous two days. The output from January to August was 533,000 tons, an increase of 14.62% year-on-year in 2020 and an increase of 18.97% year-on-year in 2019. In the short term, spandex continues to have high operating conditions, mainly because factory inventories remain low. So in 2021, most of the new domestic spandex production capacity will be in the third and fourth quarters. In July, Huahai’s new production capacity will be put into production one after another. A set of 40,000 tons of new production capacity in Chongqing Huafeng is being put into production. It is expected that materials will be released into the market in September. A set of Xinxiang Chemical Fiber is expected to be put into production in September. The 10,000-ton unit is expected to be put into operation in October. The new production capacity of the spandex factory has been gradually released in the near future, and the original equipment has been started to maintain the current level. There is still obvious room for improvement in the spandex output in the second half of the year.
Graph of spandex inventory trend in 2021
Source: Longzhong Information
The current sales of elastic fabrics are average compared with the previous period, and downstream terminal textiles are still facing a situation of insufficient funds and orders. The capital chain suppresses the production enthusiasm of weaving factories. Due to the current factors of sluggish demand, the weaving start-up is still expected to decrease. Driven by demand, the market is mostly resistant to high-priced spandex. Currently, spandex inventory has a slight rebound trend. The high level of gray cloth inventory is difficult to digest in the short term. The inventory of medium- and coarse-denier spandex has accumulated rapidly, and the supply of fine-denier specifications has also eased. Factory inventory lasts about 8-9 days. Overall, spandex inventory is still at a historically low level. Facing the market outlook of high production and high production, the inventory accumulation process still needs to be slow.
Driven by the current low inventory, spandex prices are still expected to remain high.
Figure 2019-2021 monthly apparent consumption comparison of spandex
Source: Longzhong Information
2021 From January to July, the apparent consumption of spandex reached 430,000 tons, a year-on-year increase of 12% and a year-on-year increase of 17% in 2019.
According to current data analysis, in 2021 The apparent consumption of spandex for the whole year is conservatively estimated at around 750,000 tons, with a growth rate of 9.5%. The net exports for the year are 65,000 tons, with a growth rate of 4%, and the production growth rate is estimated at 12.7%. Overall, spandex is expected to be in Under strong demand, the gap between supply and demand is still negative.
As new production capacity is released into the market in the second half of the year, industry players are worried that demand will be lower than expected, and industry overcapacity may have a negative impact on the market. Price shocks, price drops are inevitable, and the worry is the plunge. As mentioned above, the current spandex inventory is low, the current spandex supply is easing, and with the arrival of the traditional peak season, some rigid demand can still be followed, and fine-denier spandex will not appear. The situation of price but no stock may also be a good thing. The weaving market is unpredictable. Like last October, it is not impossible for a sudden wave of market orders. Now spandex in high-price areas has mostly fallen, and some traders are selling at low prices. volume, but the overall price range remains relatively high. If spandex drops sharply, early stockpiling will even significantly affect the price of gray fabrics in the future. The current inventory of gray fabric merchants is high, and we will wait for the subsequent wave of orders to come. The strong price of spandex will, in a certain sense, It will also have a certain auxiliary effect on the subsequent digestion of inventory in the weaving market.
grey fabric inventory runs in opposite directions
Chart changes in gray fabric inventory of textile and weaving enterprises
Source: Longzhong Information
At present, domestic winter clothing consumption has not yet started, and the inventory is still backlogged in weaving companies and has not been truly digested. Therefore, the subsequent decline in downstream purchasing power has slowed down. August should have been the time point when the number of days of gray fabric inventory in the same period should have declined, but instead It has shown a significant upward trend. The number of days in gray fabric inventory is close to the high in July last year. Most downstream users have doubts about the market situation of the Golden Nine and Silver Ten. They can only consider parking to reduce the inventory pressure. The current gray fabric inventory pressure in the weaving industry is particularly evident.
As we enter September, subsequent traditional festivals, Double 11, Double 12 and other e-commerce festivals will boost the demand side. Recently, we have heard that the recurrence of the epidemic in Vietnam may also prompt overseas orders to return to the country. Benefit the local textile and apparel industry. In general, there are still many uncertainties in the subsequent weaving market, and there are few positive factors. It is still in the off-season, and the impact of stagnant orders is relatively acceptable. However, it is still unknown when orders can be resumed. Industry confidence Not enough, and the follow-up will largely depend on the trend of the epidemic. If the overseas epidemic situation does not improve significantly in September, coupled with a series of shipping problems such as high sea freight prices, foreign trade companies may also miss the peak season in the second half of the year.
Summary
In the short term, spandex will still be in a high consolidation stage , in the process of upstream and downstream games, it may enter a stable period like April-May this year. Textile and apparel terminal consumption has not yet started, and the weaving operation has weakened. Most spandex factories have limited power to increase their quotations, and there have even been high price corrections. Due to the situation, the offer ranges of various spandex factories have gradually narrowed. Regardless of the cost side, the current change in demand is the most critical factor affecting the trend of spandex. In the future, we will further pay attention to the follow-up of domestic and foreign orders in the downstream. With the supply of spandex further abundant in the second half of the year, if the demand is difficult to boost or even declines, the spandex market will Prices are bound to come under greater pressure. </p
