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

login CCFGroup App

Insight | Time: Jan 3 2019 2:18PM
How will spandex market fare at the beginning of 2019
Text size
Although cut production of units of spandex industry slightly rose in the fourth quarter of 2018, operating rate of spandex industry remained at above 80%, with relatively high supply. Run rate of downstream weaving plants slowly went down, and under the background of falling crude oil, polyester and nylon, downstream market players purchased spandex weakly for rigid demand, with continuously downward spandex market. Prices of large orders or orders that were paid with cash were relatively low at the end of the year. Spandex prices declined significantly in the fourth quarter, so how will spandex market fare at the beginning of the New Year?

Cost: some units faced significant cash flow loss
In the fourth quarter, prices of raw materials such as PTMEG and MMDI for spandex production dropped sharply. Wanhua Chemical MMDI settlements decreased by 6,000yuan/mt from 28,500yuan/mt of September to 22,500yuan/mt of December. The decline of PTMEG was 600yuan/mt, with low cost. Spandex 40D prices slowly slipped, and prices of promotional cargoes were relatively low. Old units of spandex industry were still at significant cash flow loss, with ascended reduced production. Shuffle of spandex industry was expected to accelerate.

Supply: operating rate of industry was at 80-90%
Operating rate of spandex industry has been at 80-90% since October. Most plants curtailed output in different degrees, while some foreign enterprises and leading plants ran at full capacity. However, run rate of industry was anticipated to fall before and after the Spring Festival, and part units of several foreign enterprises were scheduled to cut production during this period. In domestic middle-east regions, cut production of old units was in upward trend.

Demand: operating rate of weaving plants slowly dropped
Spandex prices fell, and most dealers sold spandex with low inventory. Several dealers prepared a small number of promotional resources with super low prices. Inventory of dealers at the end of 2018 was lower than the same period of last year.

Operating rate of downstream weaving plants was at around 30-60%, while run rate slowly slipped in the fourth quarter. In December, run rate of circular knitting, single facer knitting and covered yarn slightly improved. Circular knitting ran at 30-40%, and sales of 30D in Guangdong, Xiaoshan an Shaoxing was moderate. Operating rate of integrated air covered yarn modestly rose. Warp knitting, lace, conventional yarn and cotton core-spun covered yarn were weak to stable.

It was expected that curtailed production of spandex downstream weaving plants further increases in next month. By the end of the month, run rate may slowly decline to around 10-30%.

Market outlook: not optimistic in short term
There are still many new capacities of spandex industry in the first half of 2019, with an initial estimate of 52kt, and mainly concentrated in Lianyungang, Jiangsu and Xinxiang, Henan. High efficiency capacity is anticipated to further increase. Spandex industry continues to decrease, and most old units may face intensified cash flow loss, coupled with high inventory of spandex industry at the end of 2018, cut production of spandex industry is estimated to significantly tick up around the Spring Festival. Besides, demand may shrink sharply in January-February, and in the context of relatively ample supply, the volume of downstream prepared inventory remains to be observed. Spandex market is likely to be not optimistic in short term, and price competition is expected to continue.
Related Articles
Spandex market daily (Jun 27, 2019)
Spandex market review on Q2 and outlook for Q3
Spandex market daily (Jun 26, 2019)
Spandex market daily (Jun 25, 2019)
O/R of air covered yarn slowly declines
Spandex market daily (Jun 24, 2019)
O/R of circular knitting decreases y-o-y
Spandex market weekly (Jun 17-21, 2019)
O/R of lace slips
Spandex market daily (Jun 20, 2019)
Rayon yarn market change on vortex-spun yarn operation
Development of nylon downstream sectors
Polyester supply and demand change in 2019 and outlook ...
Polyester and end-user market demand in 2019
2019 polyester feedstock market outlook and short-term ...
Direct-spun PSF market pattern change