Can eye-catching performance expect in spunlace nonwovens market in Q4?

Spunlace nonwovens have been brought into public view since the COVID-19 outbreak in 2020. High profits have attracted concentrated investment and capacity expansion inside and outside the industry. Nonwovens capacity of China expanded by around 100kt/yr in the first three quarters of 2022 with the start-up of new facilities. The demand was generally mild, while new capacities were still put into operation amid oversupply, so the operating rate was generally low.

There was dreary demand in the first three quarters, except for considerable orders received for the Jun 18 and Nov 11 shopping festivals. In terms of downstream applications, the emergency demand had gradually withdrawn from the market since the second half of 2021, especially in the export market. Although there was minor increase of living demand, the driving force was limited.

About 50kt/yr new capacity may be put into operation in the fourth quarter, but some plants are still hesitated about the expansion plants, coupled with the postponed start-up of some units especially in Xinjiang because of the epidemic. The consumer demand is growing slowly after the emergency demand declines.

According to customs data, spunlace nonwovens export of China totaled 221kt in the first three quarters of 2022, a year-on-year decline of 11%. The monthly export of the year was largely steady around 25kt, except for the Chinese Lunar New Year in February. The world is still in the process of restoring confidence from the haze of epidemics, wars and economic recessions. The export growth may slow down after witnessing high-speed growth rate in the past two years, so the export volume may be temporarily stable in the fourth quarter. The export of 2022 may be around 290kt.

Spunlace nonwovens demand mainly relies on living demand. In the fourth quarter, there may be recovery boosted by the e-commerce festival and restocking for the Chinese Lunar New Year. The consumer confidence in overseas market was worse than that in China local market, which was affected by high inflation and economic recession expectations in the first half of the year, but it started to recover in some countries led by the United States at the end of the second quarter, and a year-on-year growth is expected to sustain in the fourth quarter.