Spandex market outperforms compared with nylon and polyester

Price of chemical fibers bottomed out since 2020. The lowest price of polyester, spandex and nylon appeared in the second half of 2020 but overall price gradually increased when U.S. implemented eased monetary policy, demand recovered, commodity market like crude oil soared and some orders for textiles and apparels were transferred to Chinese mainland where better control of pandemic was seen. Price of spandex increased the biggest in this round of rise. Price of spandex 40D hiked by 143% to 67,500yuan/mt from the bottom level 27,800yuan/mt in 2020. High price of polyester 150/48F in 2021 surged by 72% compared with the bottom level in 2020, and the change of nylon 6 POY 93DTEX was at 53%. Spandex market outperformed. How about the capacity growth rate and operation status of spandex, polyester and nylon market? 

Capacity: low growth rate

Capacity expansion of spandex market slowed down in recent 2 years, with net increase at 22kt/year in 2020 and estimated at 60kt/year in 2021. Capacity of spandex is expected to approach 932kt in Chinese mainland in 2021, up by 6.9% y-o-y. Comprehensive capacity growth of spandex is estimated at 4.8% in 2020-2021. The growth rate of capacity of polyester and nylon market is expected to be 6.8% and 4.8% respectively in 2020-2021. Sales of fabrics for sportswear and elastic fabrics were hot during post-pandemic era. The content of spandex in knitted fabrics apparently ascended and more products used spandex as one of the raw materials. The growth rate of demand was far higher than that of supply on spandex market. 

Operating rate: high run rate of spandex plants

Operating rate of spandex plants averaged at 83.2% in 2020, keeping high after being low. With hot demand and supply crunch, some idled units resumed operation in the second half of 2020. The run rate averaged at around 96% in the second quarter of 2021. However, the run rate of PFY and NFY plants reached 72.3% and 66.5% respectively in 2020, with the year-to-date average at 78.2% and 82.7% respectively, which was far lower than that of spandex makers.

Stocks: remaining low

Normal spandex stocks are near 30-45 days. Price competition and promotion will be common when the inventory is above 50 days. Supply of spandex will be tight when stocks are below 1 month. That means spandex price enjoys upward potential. Spandex stocks were at 39.1 days in 2020, falling quarter by quarter, which was at 53 days, 49 days and 42 days and 13 days respectively in Q1-Q4. Average inventory of PFY and NFY was at 16 days and 25 days respectively in 2020. Year-to-date spandex stocks were at 11.2 days in 2021. Delivery of some conventional spandex needed to queue. The year-to-date inventory of PFY and NFY was at 12.8 days and 26.1 days respectively, higher than spandex. 

Demand: smooth sales of elastic fabrics

Elastic fabrics remained popular and were a fashion. Sales of fabric mixed with spandex were hot in 2021: polyester/spandex sportswear, yoga clothes, milk yarn, super-soft velvet fabrics, nylon/spandex sportswear, yoga clothes, 2-way stretch trousers, dress and light sun-protective clothes in summer, viscose/spandex and acrylic/spandex scuba knitting fabric and dralon etc. People show higher requirement for comfortability and the content of spandex climbs up in functional fabrics in post-pandemic era. Spandex become major feedstock instead of just being an accessory in some products such as sports underwear. In addition, spandex is applied into the production of mask and protective clothes amid pandemic. Under such circumstance, demand for spandex saw above 10% of growth in 2020-2021.

Seen from the turnover of chemical fiber elastic fabrics in China Textile City in Jan-May, 2021, the monthly turnover was at 0.49 million meters, up by 39% compared with 0.352 million tons in the same period of last year and up 33% compared with 0.368 million tons in the corresponding period of 2019. Note: Chemical fiber elastic fabrics mainly use woven FDY, DTY and POY as feedstock, including some polyester/spandex elastic fibers with special filament, polyester/spandex elastic composite fabrics, nylon/spandex elastic fabrics and polyester/cotton elastic fabrics (including some coating elastic fabrics and elastic PU fabrics with filament yarn as basic fabrics).  

In summary, spandex market witnesses low capacity expansion now while demand improves substantially. Stocks of spandex remain low even when plants run at high capacity. Delivery of some varieties needs to queue long. With tight supply, price of spandex is expected to be dominated by supply/demand status and may continue advancing for a period.