2020 annual report: spandex listed companies

Listed companies including Huafon Chemical Fiber, Xinxiang Chemical Fiber and Tayho New Material on spandex market successively announced annual report of 2020. Key data is shown below:

1.Performance of listed companies
Huafon Chemical is mainly engaged in the R&D, production and sales of polyurethane products such as spandex fiber, polyurethane solution, adipic acid and so on. According to the annual report, in 2020, the company's operating income was at 14.72 billion yuan, up 6.8% compared with the same period last year, and the net profit attributed to the parent company approached 2.28 billion yuan, up 23.8% compared with the same period last year. Chemical fiber production was at 204kt, up 36.3% year on year. Current design capacity of spandex was at 175kt/year, and the capacity comprehensive utilization rate was at 116.37%. Another 50kt/year spandex project is under construction in Chongqing Huafon.

Xinxiang Chemical Fiber mainly produces spandex and viscose filament yarn. It produced 60.8kt of VFY and 93.9kt of spandex in 2020 amid volatile price. According to the annual report, in 2020, the company's operating income was at 4.477 billion Yuan and the net profit attributed to the parent company was at 0.084 billion Yuan, down by 35.5% from 2019. Exports of VFY from Xinxiang Chemical Fiber accounted for around 40% of total exports in China and those of spandex occupied near 10% of national total. Xinxiang Chemical Fiber has obtained the approval of Xinxiang Ecological Environment Bureau on the “Environmental impact report of 6, 000 tons/year of recycled spandex fiber project” and Xinxiang Ecological and Environmental Bureau on the “Environmental impact report of 10kt/year high-quality ultra-fine denier spandex fiber project”. The annual sales volume of the first phase of the 100kt/year high-quality ultra-fine denier spandex fiber project has increased greatly.

Spandex and aramid and meta-aramid are major products of Tayho New Material. Based on the annual report, it obtained 2.441 billion Yuan of operating revenue in 2020, a year-on-year decrease of 3.69%, and 0.261 billion Yuan of net profit attributed to the parent company, a year-on year increase of 10.9%. Its nominal spandex capacity amounted to 75kt/year by the end of 2020. Some old units shut down forever to cooperate with the relocation. The annual effective spandex capacity was at 50kt/year. Another 45kt/year new spandex project is under building, which is scheduled to commission operation by the end of 2021.

2. Annual price and cash flow of spandex in 2020
Price of spandex inched down in the first half of 2020 when domestic demand saw negative growth amid the COVID-19 pandemic. In the second half of 2020, spandex price boosted when demand for spandex from medical field increased, some foreign orders flew into China and the application proportion of spandex heightened.

According to the data from CCFGroup, price of conventional spandex 20D-30D-40 only rose by 0.3-1.2% on the year in 2020 as the reduction in the first there quarter was big despite of surge in the fourth quarter.

BDO, PTMEG and spandex market witnessed apparently rising cash flow in 2020 compared with 2019. Market outside China saw sound demand but insufficient supply in 2020. Supply and demand recovered well within China stimulated by tolerable demand for stretch fabric and ear band of mask. BDO market performed well with ample rigid demand from PTMEG and PBT market and growing new demand from PBAT sector. Therefore, spandex value chain enjoyed support from cost and demand side. Coupled with ample capital, market players were eager to purchase.　Under such circumstance, spandex value chain witnessed better sales and higher price in the second half of 2020 and gained profit rather than suffer losses in 2019. Cash flow of spandex 40D gradually widened quarter by quarter in 2020, especially in Q4. Supported by sound profit of 20D, 30D and some differential products, overall cash flow of spandex market apparently ascended in 2020.