Demand for spandex grows stably from covered yarn market

Sales of spandex grew recently but the price did not rise. Demand for spandex was not very good during the peak season while was not bad during off-season too. The growth rate of demand for spandex is estimated to be above 10% in 2023. However, after supply of spandex increased and supply and demand of spandex was unbalanced, price of spandex remained low. Price of spandex 40D was struggling around 30000yuan/mt, the break-even line. How about the real demand for spandex in 2023? It is noteworthy to see the operating rate of downstream factories.

The above operating rate is the average of spandex downstream plants including covered yarn mills, circular knitting plants and warp knitting mills, the average in Jan-Aug of 2023 was only next to the same period of 2021 and has exceeded the corresponding period of 2019. The run rate ascended further in the first half of Sep, 2023. The increase of run rate in Q3 was slightly lower than 2019. Impacted by the COVID-19 pandemic, the run rate remained low at first in 2020 but the production gradually grew from Q3.

In terms of average operating rate of fabric mills, it saw a small peak in Mar 2023 but fluctuated little in Apr-Sep, which was the smallest fluctuation in recent five years.

Covered yarn is the direct downstream market of spandex and is the upstream link of fabrics, accounting for 1/3 of demand for spandex. The features of operating rate of covered yarn mills in 2023 is balanced, with small fluctuation and weaker distinction between peak season and off-season.

Operating rate of air covered yarn plants in Shengze,Xiaoshan and Shaoxing has remained above 60% since Mar 2023, with monthly difference below 5 percentage points. That meant demand was stable and robust. From the second half of Aug, the run rate of air covered yarn plants slightly increased, recovering to around 65% by mid-Sep.

The operating rate of core-spun yarn plants has been above 60% for seven months since Mar 2023.

The average run rate of core-spun yarn plants in Zhangjiagang was around 59% from early-Sep, only around 4.5 percentage points lower than the average of 64.5% in Q1-Q3 of 2021. The demand had strong sustainability and stability.

Conventional covered yarn market started weakening from end-Jun, 2023.The operating rate of conventional covered yarn plants rose by 2-3 percentages points from end-Aug and the increment was weaker than other covered yarns. Demand for conventional covered yarns slightly softened due to the change of fashion. For example, the demand for products such as silk stockings and panty-hose grew slowly.

In summary, demand for covered yarn apparently improves in 2023. The rigid demand does not change much every month year to date. The application of covered yarn in woven downstream market is steady and robust. Many plants shut down for holiday in early-2023 but the run rate of covered yarn mills has been mainly around 70% after demand warmed up from Feb. The application in knitting sector is relatively weaker as the downstream products of knitted sector have high inventory.