Why does spandex price rise again? – ChinaTexnet.com
Home >> Textile News >> Why does spandex price rise again?

Why does spandex price rise again?

2021-01-13 08:31:25 CCFGroup

Rigid demand for spandex gradually weakens recently, and many fabric mills intend to shut down for the Lunar Chinese New Year (in mid-Feb). Spandex companies till raised offers by around 2,000yuan/mt last week, and the market price chased up, with price of 20-40D up by around 1,000yuan/mt, bigger for some tight descriptions. Why does spandex price increase again after the New Year’s Day holiday and how about the durability?

Firstly, macro environment is bullish recently. Stimulated by the free inoculation of the vaccine against the COVID-19 and the complete of Sino-Europe investment agreement negotiation, market players presented apparently recovering confidence. In addition, capital fundamental is loose and the interest rate is low. Participants show higher intention to take long position toward commodity such as oil and stocks. 

Supply of spandex such as 20D and 30D for light fabrics for spring and summer wear is tight amid moderate demand, and the delivery needs to queue. Price of spandex 40D inched down in the second half of Dec and sales slowed down. However, spandex enterprises raised price in early-Jan and stocks were low. Under sellers’ market, rigid demand and replenishment grow. Stocks of spandex declines to 10 days again after price increased. In addition, many downstream buyers purchase in advance as the logistics are expected to suspend earlier amid the pandemic. In the early raise of price after the New Year’s Day holiday (Jan 1-3), ordering price for customers that paid timely was according to the original level. The capital recouping apparently improves compared with the year-end in past years.

Secondly, production cost of spandex apparently ascends, particularly driven by the substantially increasing PTMEG price. With sound demand, low stocks at hand and rising cost, spandex plants tend to shift cost to downstream market. Current cash flow and price of spandex have hit the highest level in recent 5 years.

Cost of spandex is increasing. Price of major feedstock PTMEG climbs up firmly amid tight supply and may keep rising under sellers’ market in short run.

Thirdly, operating rate of spandex downstream market declines but remains high. Downstream fabric mills are active in production and offtaking orders with low stocks and in expectation of increasing feedstock. As a result, the holiday schedule of downstream plants for the Lunar Chinese New Year is delayed compared with past years.

Fabric mills show high production intention now. O/R of spandex downstream mills is largely stable, with run rate of circular knitting plants, lace knitting units, cotton core-spun mills and conventional covered yarn plants at around 50-60% and that of warp knitting mills and air covered yarn plants at above 70-90%. Some fabric mills will suspend production from the second half of Jan and some will sustain production until end-Jan or early-Feb. The holiday schedule for the Spring Festival is later than the last year. Downstream buyers still intend to replenish but the supply of spandex is tight.

In summary, spandex market still enjoys sound support from cost side as price of PTMEG and accessories increases. Production cost of spandex market is ascending but stocks of spandex keep low. Spandex market is sellers’ market now. Price of spandex is expected to shiver at high level in Jan. Downstream buyers want to restock, but the delivery needs to queue amid tight supply of spandex. As for the price of spandex after the Lunar Chinese New Year, it may rise further if the resumption of downstream plants is not postponed by worsening pandemic in China.