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Insight | Time: Jan 12 2022 10:05AM
Market review of spandex in 2021
 
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The additive proportion of spandex in textiles and apparels sectors has apparently increased to 10-25% when people's requirement for the comfortability heightened during post-pandemic era. The content of spandex in sportswear, yoga clothes, and sunscreen clothes was relatively higher. The consumption of spandex in pandemic prevention materials remained. Exports of textiles and apparels apparently grew with recovering consumption outside China. Factories were active in producing warmth products like sweater, dralon fabric and super-soft spandex fabric in expectation of cold winter under La Nina and consumers showed high acceptance. Therefore, supply of spandex was tight most of the year in Chinese mainland. 


Spandex market continued witnessing high prosperity in 2021. Spandex outperformed among raw materials of textiles and apparels in terms of price, capacity, production, operating rate, stocks, profit and import and export etc. Spandex market started weakening at the end of 2021 as new units commissioned operation, some export orders have been pulled forward and the improvement of domestic consumption lacked momentum. Price of spandex headed south. 

Price: surged at first but rapidly reduced in end-2021

Price movement of spandex could be described as 3 stages: in the first stage, supply of spandex was behind demand from Jan to Aug when demand from yoga clothe, casual fabric and the pandemic prevention materials was moderate and orders for textiles and apparels were tolerable within and outside China. Price of spandex 20D, 30D and 40D rose by 57,500yuan/mt, 45,500yuan/mt and 40,700yuan/mt respectively, with increment at 124%, 100% and 108% respectively. The second stage was from Sep to the first half of Nov when price of spandex shivered at high level as replenishment reduced after spandex price hit 13-year new high. The third stage was after the second half of Nov wne price rapidly fell after new units started operation, some export orders have been placed in advance while domestic consumption lacked upward momentum. Spandex prices dropped by as high as 20% at the end of year. Price of 20D, 30D and 40D was at 60,000yuan/mt, 70,000yuan/mt and 80,000yuan/mt respectively. 

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According to the data from CCFGroup, yearly average price of spandex 20D, 30D and 40D was at 87,360yuan/mt, 78,640yuan/mt and 67,500yuan/mt respectively, up 140%, 121.8% and 122.8% on annual basis respectively. 

Yearly average price of spandex in 2021 (Unit: yuan/mt)
Year 20D 30D 40D
2020 36,400 35,450 30,300
2021 87,360 78,640 67,500
Change  50,960 43,190 37,200
Change % 140.00% 121.80% 122.80%

Capacity and production: wider growth rate

The growth rate of spandex capacity apparently enlarged. By the end of 2021, the spandex capacity was estimated at 971.5kt/year, up by 100kt/year or 11.5% compared with 871.5kt/year in 2020. The spandex production was expected to increase by above 14% on annual basis to above 800kt in 2021 in Chinese mainland. 

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Operating rate and stocks: under 95% of operating rate and historic low stocks

The average operating rate of spandex industry was at 94.6% in 2021, up by 11.4 percentage points on the year, which was at 95.7% in the first three quarters of 2021 but at 91.3% in the fourth quarter impacted by the Dual Control of energy consumption, weaker market atmosphere and rapidly mounting inventory.

 

Inventory of spandex apparently decreased in 2021, down by around 28 days year on year to 11.2 days, hitting historic low. Supply of conventional spandex varieties like 10D-40D was largely short most of 2021. However, downstream buyers shortened spandex inventory at hand and mainly purchased under small lots with plunging price in Dec. Suppliers met higher difficulty in selling. Stocks of spandex accumulated, which rapidly piled up to near 1 month by the end of 2021.

Operating rate and stocks of spandex plants in 2020-2021
Year O/R (%) Stocks (day)
2020 83.2 39
2021 94.6 11.2
Change  11.4 -27.8
Change % 13.80% -71.40%

Import and export: price and quantity both moved up

Exports of spandex rose by 26.0% on annual basis to 74.1kt in Jan-Nov, 2021, with monthly export at 6,738 tons. Average export unit price was at US$8,595/mt in Jan-Nov, 2021, up by US$3821/mt compared with the corresponding period of last year. 


Imports of spandex hiked by 27.8% or 7,361 tons on the year to 34kt in Jan-Nov, 2021 due to tight supply most of time and the appreciation of the exchange rate of RMB against USD. The average import unit price was at US$10,072/tons in Jan-Nov, 2021, up by US$4,120/tons. 

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Profit: improved substantially

The profit of spandex apparently improved in 2021, hitting multi-year high in the first three quarters. Taking 40D as an example, the yearly cash flow was above 17,000yuan/mt, surging on the year. The cash flow of spandex rapidly moved up in Jan-Jul, 2021 but started inching down after Aug and rapidly shrank at the end of year with plunging spandex price but stable major feedstock prices. 

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[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.
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