Viewing spandex market tendency from demand field

Demand from spandex downstream fabric mills weakened when orders for the online shopping spree and Christmas Day ended. However, commodity market moved up strongly as players expect demand to recover in 2021 stimulated by the progress of vaccine against the COVID-19 and participants hold optimistic view toward commodity market amid loose global liquidity. Price of polyester, nylon, cotton and cotton yarn rose strongly in Dec, while that of spandex 40D shivered weakly in Dec after increased by around 40% previously when rigid demand and replenishment for spandex apparently decreased.

Demand was a key factor affecting spandex price in the second half of 2020, and the operation status of downstream market will be analyzed below: Operating rate of spandex downstream mills remained medium-to-high now. Run rate of covered yarn plants, circular knitting plants, warp knitting mills and lace knitting plants was averaged at around 61.1%, down by around 5.6% in Dec and up by around 12.1% on the year. Therefore, rigid demand for spandex was moderate. Orders and stocks of downstream light fabrics remained ample, and some mills still produced thick fabric. Delivery of some 15D-30D still needed to queue. Supply of 40D-210D gradually loosened as production proportion of it was big and demand turned muted in some regions.

Covered yarn sector
Covered yarn is the biggest application field of spandex, accounting for above 30% of total demand for spandex. Operating rate of air covered yarn plants and cotton core-spun yarn was mostly around 60-80%, moving down slowly but remaining high. Production of fine covered yarn increased while that of coarse ones slightly declined. Air covered yarn plants still ran at high capacity in Shengze, Xiaoshan and Shaoxing and saw low stocks. Companies were active in hoarding up stocks when price of major feedstock polyester and nylon obviously rose. Partial market share of conventional covered yarn was snatched by air covered yarn. Conventional covered yarn enjoyed stable market share in low-end socks and high-end men’s wear fields. Sales of stagnated spandex were moderate in medium-to-low end fields after spandex price hiked, while the acceptance of normal spandex weakened. High-end conventional covered yarn mainly used branded spandex and produced according to orders. In Zhuji and Yiwu, operating rate of small circular knitting plants apparently decreased after traditional peak season passed. In addition, run rate of mills declined to 20-30% in Yiwu and Jinhua affected by the electricity consumption limit in recent period, resulting into slower sales of black spandex.

Circular knitting market
Circular knitting market is the second largest application section of spandex, which made a great contribution to the demand for spandex in the second half of 2020. Operating rate and orders of circular knitting plants declined in Sep-Nov after delivery of thick fabrics and fabrics for sportswear and sweater finished. In Dec, run rate of circular knitting plants dipped to around 50-70% and production of fabrics for yoga cloth, plain fabric, milk yarn and rib fabrics increased, especially those for yoga clothes. However, production of fabrics for Roman fabric, sweater and winter sportswear reduced. Thus, operating rate apparently headed south.

Warp knitting field
Rigid demand for spandex from warp knitting market, which is the third largest application field of spandex, was moderate. Operating rate of warp knitting plants dropped but still remained as high as 70-80%. Orders for warp knitting fabrics declined slightly in Guangdong and some plants turned to hoard up stocks with firm polyester and nylon price. Most plants focused on producing fabrics for yoga cloth, sportswear and swimwear etc. Above 50% of warp knitting plants started producing fabrics for spring and summer wear in 2021. Low-end warp knitting plants mainly come from Haining, Zhejiang and Changshu, Jiangsu, mainly running at above 80% of capacity. Consumption of spandex 40D was big in Haining, Zhejiang and Changshu, Jiangsu, but the operating rate is supposed to reduce greatly later after peak-season passed. Some buyers narrowed stocks as cash flow of spandex market was high. Mainstream trading price of spandex 40D slipped by 1,000yuan/mt to around 36,500-38,500yuan/mt.

Lace knitting and braid market
Lace knitting market is mainly in Changle, Fujian, and some plants in Chaoshan, Guangdong also produce lace knitting. Price of spandex for ear band of mask experienced sharp up-and-down in the first half of 2020, and many over-produced 140D followed to lace knitting market. Many 140D were discounted before and price of 140D increased later than 40D in the second half of 2020, with smaller increment. As lace knitting fabrics are mainly accessories and many low-priced resources existed before. Some were active sellers, ending up with bigger decrement of 140D/210D than 40D in Dec.

Operating rate of braid mills slowly descended in Dec after orders diminished. Thus, rigid demand for spandex slowed down. Some digested the feedstock purchased before. Orders for spandex 140D for ear band of mask apparently dipped, while demand for spandex 70D and 40D for ear band of mask remained good.

The population mobility is supposed to be frequent during the coming Spring Festival holiday (in Feb). The production resumption after holiday may be affected by the pandemic, and players expect commodity price to rise with loose monetary worldwide. Thus, some downstream fabric mills put production in advance. Production of out-of-seasoned thick fabrics prominently dips but orders and stocks of light fabrics remain moderate. Therefore, rigid demand for spandex is still expected to enjoy support in short run. Stocks of spandex are low now. Price of spandex may diversify. Slight discounts are expected to be available for large orders and stagnated resources and price of seasonal goods may be in range bound.