Spandex market witnesses a slower rising

Prices of spandex kept rising in the second half of Mar but the increment apparently shrank compared with Feb. Price of conventional spandex 20D-40D rose by around 1,000-3,000yuan/mt. Slower price increase was mainly because of the following 2 reasons: firstly, some downstream fabric mills met resistance in taking new orders after spandex prices surged after the Lunar Chinese New Year holiday and some witnessed falling profit. Secondly, as volatile price change of feedstock disfavored the order-taking on downstream market, to sustain sustainable development of spandex industry, spandex companies only slightly revised up price amid tight supply.

Price increase of spandex could be described as demand-driven recently, how about the operation status of downstream mills?

Operating rate of downstream market was high now. Operating rate of circular knitting plants and lace knitting plants in Zhejiang, Jiangsu and Guangdong was at 50-60% and that of cotton core-spun yarn plants in Zhangjiagang, air covered yarn plants in Zhejiang and Jiangsu and warp knitting mills in Guangdong rose to 70-90%. Scarce new orders may weigh on the run rate on downstream market after the Tomb-sweeping Festival (Apr 3-5). Orders for autumn in end-user market should be concerned.

Stocks in covered yarn plants, circular knitting units and warp knitting mills were low now. Producers concentrated on delivering orders taken earlier, with scant new orders. In addition, prices of chemical fibers and cotton textiles largely headed south recently, disfavoring the talk of new orders.

Spandex content of covered yarn field was mainly at 13%. Orders for covered yarn were tolerable and supply was tight, ending up with greatly hiking price after Lunar Chinese New Year holiday. As for circular knitting sector, the content of spandex was around 10-30% in some fabrics for sportswear and yoga clothes. Circular knitted products contained apparently increasing spandex in 2020. Content of some two-way stretch fabric and Roman fabric was also above 10%. However, some downstream manufacturers started limiting production to market ability or avoiding hoarding up stocks of goods containing spandex after spandex prices continued soaring.

In terms of warp knitting field, the content of spandex in some super-soft fabrics was near 5.5-6% in Haining, Zhejiang and Changshu, Jiangsu, while it was aroura 10% in some knitted velvet. Operating rate of velvet goods for apparels was as high as 80-90%. Operating rate of warp knitting plants was around 70% in Guangdong, and makers mainly produced fabrics for swimwear, plain fabric and mesh cloth.

Lace knitting plants in Changle, Fujian mainly digested spandex purchased before and presented lower buying interest toward high-priced spandex, running at aroura 40% of capacity. Some even suspended producing ear band for mask amid scarce new orders. Stocks of spandex 70D and medium-to-coarse denier ones were higher than those of conventional varieties such as 10-40D.

Supply tightness on spandex market sustained. Players should keep eyes on downstream orders and the spandex content of downstream products. With surging spandex price, demand for other substituted goods including polyester DTY, nylon DTY and PBT is likely to grow.

Supply of spandex was high with historic high run rate. Some old units plan to resume operation while the progress was restricted by technology and feedstock supply issue. Zhejiang Huahai’s 30kt/year new unit is expected to start production in May at the earliest, hard to alter tightness temporarily. Stocks of spandex have accumulated to above 10 days, still remaining low in history.

All in all, prices of spandex may consolidate at high level in short run. Most downstream buyers are expected to purchase on a need-to-basis as current spandex prices have hit the highest level in recent decade. Orders from outside China still have uncertainty on the pandemic. Downstream grey fabric and apparel sectors meet resistance in tracking the uptrend on feedstock market. Prices of spandex may depend more on downstream orders for autumn in Q2. Strong mindset among sellers is likely to weaken.