test


Member ID:
Password: 
Stay logged in for 30 days
Forget Your Password?
close

login CCFGroup App

Insight | Time: Jul 17 2019 4:24PM
The scissors between spandex supply and demand narrows
 
Text size
After the weak demand in the second quarter, there is bullish news for Sino-US trade environment at the end of the second quarter. Boosted by this, order acceptance of domestic weaving plants lightly increased in the first half of July, while the inventory reduction of some downstream weaving plants with high inventory accelerated, with modestly rising run rate and demand. Partial spandex plants increasingly shut down or cut production in the second half of June, and supply fell, leading to narrowed scissors of supply and demand. Thus, the oversupply conflict slightly eased.

Demand slightly rebounded
Operating rate of spandex downstream weavers’ air covered yarn and conventional covered yarn has been ascended since the beginning of July, while run rate of circular knitting modestly ticked up, with stable operating rate of warp knitting and lace. Downstream orders edged up on the whole, and some market players were still sporadically concerned about downstream operating rate.

Downstream was idled for longer time this year compared with previous years. Since April, run rate of weaving plants slowly slipped, and decreased to a relative low by the late June. At the beginning of July, operating rate modestly rose. Finished goods inventory of some spandex downstream weaving plants was at a high level on the whole, especially in the fields of double facer circular knitting, super soft fabrics and warp-knitted velvet. Midstream and downstream weavers mainly purchased spandex for rigid demand, with few prepared inventory. Midstream and downstream reduced inventory, with inventory mainly at 10-25 days. Inventory of some agents was at a high level, and spandex plants were under great inventory pressure.


Supply modestly shrank
At the beginning of the second quarter, operating rate of spandex industry was at above 90%. With the weak demand, plants were under significant pressure from production and sales, coupled with cash flow losses of coastal units, the amount of shutdown or output cuts gradually increased. By the late June, Xinxiang Chemical Fiber, Zhejiang Banglian and Shaoxing Sihai collectively shut down or curtailed production, with total reduced capacity of 45kt, and run rate of industry descended to above 80%. In the first half of July, some units in Zhejiang ran at a lower rate, and operating rate of industry continued to decline. The overall increment of spandex supply side was small in July-August, and industry supply was at a relatively low level in the second half of this year.


Cost edged down
From the second quarter to the beginning of the third quarter, main raw materials (PTMEG and MMDI) for spandex production went down, but the decrease of raw materials was smaller than that of spandex. The drop of main raw material cost was expected to continue to the third quarter in short term. For spandex plants, losses of old units ascended. Though some units shut down or cut production at the end of June, market was likely to face the oversupply pattern. Spandex prices were estimated to stay a low level, and promotions for market inventory was anticipated to still exist. The cost decline can’t effectively improve the loss situation of spandex old units.
Date Spandex PTMEG MMDI Spandex main raw material cost(0.78*PTMEG+0.18*MMDI)
2019-4-1 31,900 17,200 24,000 17,736
2019-7-15 29,600 16,725 19,100 16,484
Change (mt) -2,300 -475 -4,900 -1,253
Change (%) -7.2% -2.8% -20.4% -7.1%


Market outlook: Sellers mainly sell cargoes
In the third quarter, the divergence between spandex supply and demand slightly narrows, and demand modestly rebounds, with edging up procurement for rigid demand. In terms of supply side, though newly added capacity of Xinxiang Chemical Fiber is released, there are still shut-down old units, coupled with shut-down spandex plants in Xiaoshan and other regions, industry supply is likely to slip, and the relationship between supply and demand may improve. Spandex plants enter the third quarter with relatively high inventory, while demand remains optimistic, and sellers are expected to be concentrated on sales. Supported by cost, the decrease of spandex prices may narrow, but promotions for new products and degraded products may continue.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
Related Articles
Spandex market weekly (Sep 2-6, 2019)
Spandex market daily (Sep 5, 2019)
O/R small circular knitting in Yiwu rises
2019 semi-annual report of Tayho Advanced Materials
Spandex market daily (Sep 4, 2019)
Spandex market daily (Sep 3, 2019)
O/R of air covered yarn increases
Spandex market daily (Sep 2, 2019)
China spandex industry operation report (Aug 16-31, 2019)
Circular knitting plants in Guangdong run at low rate
 
Research
Longitudinal data change of MEG under expansion cycle and ...
PTA: H1 2019 market review and H2 market forecast
Brief analysis on the annual report of listed companies in ...
Polyester market in 2019: H1 2019 market review and H2 ...
Operation of China's textile and clothing companies in 2018
Rayon yarn market change on vortex-spun yarn operation
 
 

浙公网安备33010902000742号