Spandex market performs worse than anticipated after Spring Festival

Prices of major raw materials of cotton textiles and chemical fibers kicked off a good start after Spring Festival holiday while price of spandex was largely stable, with price of tight spandex varieties up by 500-1000yuan/mt after holiday. Fabric mills resumed operation slowly after holiday, ending up with insufficient rigid demand for spandex. Many downstream buyers have restocked spandex before or after Spring Festival holiday. The discussion and trading of spandex remained sluggish after holiday. Supply exceeded demand on spandex market and workers were slow in coming to their positions after holiday. Most downstream buyers digested spandex prepared before. Price of spandex lacked upward momentum and presented largely stable, worse than earlier anticipation.

Supply of spandex apparently increases but buyers focus on digesting spandex bought before

Many downstream buyers were active in replenishing before Spring Festival holiday. The inventory of spandex was rapidly transferred to downstream market in Jan and some orders were delivered after holiday. Price of PTMEG hit periodical bottom and the inventory of spandex suppliers was transferred to downstream sector. The operating rate of spandex plants apparently ascended in Jan, up to 80% in end-Jan from earlier 74%. Many spandex plants have resumed operation after holiday and the run rate of new units was increasing. Operating rate of spandex plants rose by around 10 percentage points over pre-holiday level to current 84%.

As for demand, most fabric mills consumed spandex prepared before. The cold weather after holiday affected the return of workers after holiday. The operating rate of downstream plants rose slower than past years, ending up with insufficient rigid demand for spandex. Spandex plants saw muted new orders. The spandex inventory of downstream plants can guarantee production until end-Mar/early-Apr. After more workers returning to their positions, the operating rate of fabric mills may gradually recover to pre-holiday level by early-Mar and the run rate in Mar-Apr will be constrained by orders and buying interest. Downstream orders are still uncertain now, and players hold mixed expectation.

Moderate performance of major feedstock after Spring Festival holiday

Major feedstock of spandex performed moderately after Spring Festival holiday with largely steady prices. The prices of major feedstock of spandex was near the bottom in the same period of past years. After the operating rate of spandex plants increased, demand for PTMEG improved. Buyers hold weak anticipation with expanding capacity of PTMEG but supply and demand of PTMEG may improve in short run. Sellers show higher intention to stabilize price with pressure from losses.

Market outlook

Major feedstock of spandex presents moderate. Demand for some sunscreen apparels made from nylon and spandex and orders for fabrics for yoga clothes enjoy support, but oversupply of spandex will be hard to change with rising operating rate of existing spandex plants and the release of some new units. Supply and demand of spandex is relatively weaker than that of other chemical fibers. The inventory of spandex was apparently transferred to downstream sector before the Spring Festival and some good performance is pulled forward, which may constrain the performance of spandex in spring. In short run, price of spandex is estimated to be hemmed into a tight range and that of some low-priced resources, tight varieties and apparently unprofitable goods may be slightly revised up. Discounts will be available for some varieties with high inventory or stagnated sales.