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Research | Time: Jul 21 2022 1:15PM  Editor:Tina Kong
Why demand for spandex witness rare negative growth?
 
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Foreword

Why did demand for spandex so bad in the first half of 2022. Demand for spandex saw negative growth for four consecutive quarters, what's the problem?


Core views

*Demand for spandex has witnessed negative growth for four consecutive quarters in Chinese mainland, and demand apparently improved in Q2 compared with Q1 2022.

 

*Export value of textiles and apparels increased in China with economic downturn worldwide, high inflation outside China and the Russia-Ukraine conflict, while export volume of cotton fabric, woven apparels and other apparels decreased by around 10-30% on annual basis.

 

*Sales of apparels were sluggish in Apr and May as the income and consumption was impacted by the spread of pandemic in some regions of China. The piling-up of stocks of spring and summer fabrics affected the operation of factories and exerted negative effect on the production of autumn and winter fabrics.

 

*The operating rate of downstream fabric mills in the first half of 2022 was lower than that in the second half of 2021, while there were many new warp knitting and circular knitting machine in the past two years. Inadequate orders and muted consumption intensified the price competition on fabric market.

 

*In Jan-May, 2022, the net exports of spandex decreased by around 20% on the year in Chinese mainland.

 

*However, the growth rate of supply was big. Spandex market turned to be oversupplied. The price competition was fierce on the market. Some downstream plants shifted to purchase low-priced spandex under cost pressure. In addition, leading spandex enterprises' new units intensively started operation. Price accelerated falling amid the competition of market share.


Content

I. Inflation and pandemic impact the consumption

1. Export: export value up by more than 10% and export of some varieties shrank

2. Domestic sales were soft. Cumulative retail of textiles and apparels saw negative growth


II. The operating rate of downstream plants was lower than last year in the first half of 2022

1. Covered yarn field

2. Circular knitting field

3. Warp knitting field


III. Net export of spandex reduced by around 20%


IV. Supply surged and concentration ratio heightened

1. Soaring spandex supply

2. Concentration ratio of spandex climbed up. Big plants were snatching market share

V. Price and profit

1. Collapsing price

2. The cash flow of spandex and upstream value chain shrank. 40D turned to see heavy losses

3. Stocks of spandex hit historic high


VI. Will demand keep weakening or bottom out?

1. How bad is the demand?

2. Will demand keep weakening or bottom out?


Chart

Chart 1. Demand for spandex in Chinese mainland by quarter

Chart 2. Export value of textiles and apparels in 2020-2022

Chart 3. Cumulative growth rate of apparels, shoes, hat and knitwear in above-designated units


Chart 4. Cumulative growth of online retail sales of physical goods

Chart 5. Quarterly operating rate of covered yarn plants in 2020-2022

Chart 6. Quarterly operating rate of circular knitting plants in 2020-2022

Chart 7. Quarterly operating rate of warp knitting plants in 2020-2022

Chart 8. Monthly net export of spandex in 2021-2022

Chart 9. Quarterly capacity of spandex in 2018-2022

Chart 10. Concentration ratio of the top 5 spandex plants in 2018-2022

Chart 11. Price of spandex in 2008-2022

Chart 12. Cash flow of spandex value chain in 2021-2022

Chart 13. Stocks and operating rate of spandex plants in 2021-2022


Table

Figure 1. Export of textiles and apparels by product in Jan-May, 2022

Figure 2. Price decrement in H1 2022 compared with yearly high in 2021

Figure 3. Average price, median price, highest price and lowest price of spandex in 2008-2022


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