Spandex market review in H1 2025 and H2 outlook

In the first half of 2025, new capacity in the spandex industry continued to be gradually released. Demand still grew, but the growth rate narrowed compared with the first half of 2023-2024. Price competition was still common in the spandex market. Prices only rebounded slightly after the Spring Festival, and showed a slight downward adjustment in other months. The spandex industry has been in a long-term loss, and the cash flow pressure of 40D was still obvious. Coupled with costs such as finance and depreciation, most enterprises have suffered extremely obvious losses. The average operating rate of the spandex industry in the first half of the year was still more than 3 percentage points lower than the same period of last year.

Capacity: increased by 10.5% on the year; production: very low growth rate

In the first half of 2025, the spandex capacity increased by 76kt to 1430.5kt/year by the middle of the year in the Chinese mainland, a year-on-year increase of 10.5%. Chongqing Huafon increased its capacity by 30,000 tons, Fujian Hengshen raised its capacity by 10,000 tons, and Ningxia Hyosung adjusted up its capacity by 36,000 tons. The cumulative capacity increase was 76,000 tons in the first half of the year. In terms of output in the first half of the year, due to the year-on-year decrease in industry operating rate and the slow commissioning of some new capacity, the growth rate of spandex output was significantly narrowed in the first half of 2025.

Price: down by more than 10% on annual basis

The price of spandex rose slightly and then fell slightly in the first half of 2025. In the first quarter, the price of spandex retreated after rose at first, but the quarterly price fluctuation was extremely small. After the price rose and fell, it was basically the same as the price at the end of last year. In the second quarter, the price of spandex fell slowly. Although the market had unfavorable environments such as oversupply and Sino-US traders, the cost support of the entire industrial chain was extremely obvious. Under the long-term loss of spandex factories, the price concession space was extremely narrow. Compared with the end of last year, the prices of conventional specifications of spandex reduced significantly. The prices of spandex 20D, 30D and 40D all declined by 700yuan/mt, with a decline in the range of 2.5%-2.9%, and the prices repeatedly hit new lows in recent years.

The average price of spandex 20D, 30D and 40D was at 27,357yuan/mt, 26357yuan/mt and 23857yuan/mt respectively in the first half of 2025 in Chinese mainland, down by 13.9%, 14.4% and 14.3% respectively year on year.

Operation: medium-to-high operating rate and high inventory

In the first half of 2025, the contradiction between supply and demand in the spandex industry was still obvious, the effective market demand was insufficient, and the competition among peers intensified, which still suppressed the operating rate of the spandex industry in the Chinese mainland. The average operating rate was only 80.9% in the first half of the year, a year-on-year decrease of 3.2 percentage points. In the first quarter of 2025, the operating rate of the spandex industry was characterized by a first decline and then a slow increase, with a quarterly average operating rate of 78.8%, a month-on-month decrease of 3 percentage points compared with the fourth quarter of 2024, and a year-on-year decrease of 2.5 percentage points. In the second quarter, the operating rate of the spandex industry showed a wide range of fluctuations, with a quarterly average operating rate of 83.0%, an increase of 4.2 percentage points from the previous quarter and a year-on-year decrease of 3.8 percentage points. Except for a few leading and high-end brand enterprises that continued to operate at high levels, the operating rate of most enterprises still fluctuated significantly.

In the first half of 2025, the average inventory of the spandex industry was 49.4 days, a year-on-year increase of 14.8%, but the average inventory was still significantly lower than those in the second half of last year. In terms of the inventory of spandex suppliers, with the price increase of spandex factories before the Spring Festival in 2025, the expectation of the traditional peak season after the festival and the "rush to export" operation of some foreign trade orders, coupled with the obvious losses on the supply side, resulting in more shutdowns and production reductions of some units, the average inventory was 49.1 days in the first quarter of the industry, a decrease of 4 days from the previous quarter and an increase of 11 days year-on-year. The inventory in the quarter showed a "W" trend. In the second quarter of 2025, the average inventory of the spandex industry was 49.6 days, an increase of 0.5 days from the previous quarter and an increase of 1.7 days year-on-year. In each month of this quarter, the inventory accumulation was obvious in the first half of month, and there was more impulsive increase of sales ratio in the late of month.

Cash flow: moving down year on year

In the first half of 2025, the cash flow of spandex 40D was still compressed, and the average cash flow in the first half of the year was compressed to 1,170yuan/mt, a year-on-year decrease of 26.4%.

In the first quarter of 2025, the cost of main raw materials required for spandex production fluctuated downward, and the price of spandex fluctuated and consolidated. In the first quarter of 2025, the cash flow of spandex 40D was in upward correction. The average quarterly cash flow of spandex 40D was 1,233yuan/mt, a month-on-month decrease of 20% and a year-on-year decrease of 22%. The price of spandex in the first quarter was at a historical low. After a weak rebound in February, the price of spandex fell slightly at the end of March. The monthly average price of spandex in March was still at the high point of the first quarter. Due to the continuous downward trend of PTMEG in the context of large-scale capacity expansion in the raw material end, while price of MMDI rose at first and then retreated. The slow decline in the cost side and the gradual increase in product prices promoted the marginal increase of the cash flow of spandex 40D in the first quarter. In the second quarter, although the price of spandex fell very slightly, the monthly average price declined marginally. The price of MMDI was slightly adjusted downward, and the market price of PTMEG was consolidated sideways. The average cash flow of spandex 40D fell back to 1,107yuan/mt, a month-on-month decrease of 10% and a year-on-year reduction of 30%.

H2 market outlook

Price of spandex is expected to be in downward correction in the first half of third quarter in 2025. The demand is anticipated to be weak but the price may reduce narrower with ongoing losses. In the second half of Q3, spandex plants are likely to face easing inventory burden driven by the downstream replenishment. However, prices of spandex will be hard to rebound when there is capacity expansion and market competition if there is no cooperation from big production curtailment in BDO-PTMEG-Spandex industrial chain. In addition, attention should be paid to the intensity of the country and the industry in rectifying the "involutionary" competition; the price of spandex may be high at first but then fall in the fourth quarter.