Spandex price hard to hold steady pressed by demand and supply

Price of BDO rebounded and then shivered. Impacted by it, PTMEG plants faced increasing cost pressure and were eager to raise price. However, spandex plants showed apparently looking-on mindset and downstream sectors were hard to transfer the cost. By convention, price of spandex is supposed to be difficult in rising from the fourth quarter to the Spring Festival. Spandex price has been hit historic low. How will it fare at the end of year?

Price of raw materials of textiles and apparels slightly declines

Price of raw materials of textiles and apparels largely edged up in the first half of Oct when the tension escalated in the Middle East at the beginning of fourth quarter and there was stimulus from macro environment. However, the uptrend did not last long. With collapsing cost and less-than-anticipated demand, price of raw materials of textiles and apparels moved down in recent one month. Price of PFY, NFY and cotton yarn fell by 2.9-5.6% and that of rayon yarn and spandex 40D was hemmed into a tight range. Spandex 40D was mainly pegged at 23500-25500yuan/mt, with some lower at 22500-23000yuan/mt and higher at 25500-28500yuan/mt for some medium-to-high end ones.

Operating rate of downstream fabric mills medium-to-high

Operating rate of downstream fabric mills remained high by mid-Nov. Some saw falling new orders and started producing inventory. The operating rate of warp knitting plants and circular knitting mills in Foshan, Guangdong inched down in the first half of Nov. With warm weather, sales of velvet fabrics, thermal fabrics and fabrics for sweater were slow. Some warp knitting plants turned to produce the inventory of polyester fabrics.

The operating rate of fabric mills was at 55.3% by mid-Nov, down by 1.1 percentage points over early-Nov, 1.7 percentage points higher on the year. Currently, the operating rate of air covered yarn mills in Zhejiang and Jiangsu, conventional covered yarn plants in Zhejiang, cotton core-spun yarn mills in Zhangjiagang and warp knitting mills was at 70% or above, that of circular knitting mills in Zhejiang, Jiangsu and Chaozhou and Shantou from Guangdong, braid mills in Guangdong and warp knitting plants in Haining at 50-60% and that of circular knitting mills in Foshan, Guangdong and lace knitting mills in Fujian at 20-25%. The average operating rate of downstream plants was slightly higher compared with the corresponding period of last year. The additive proportion of spandex in textiles and apparels increased driven by the low price. The overall rigid demand for spandex remained. As most fabric mills faced tight capital and the Spring Festival is earlier this year, in end-Jan, fabric mills may adjust their operating rate in Dec.

Supply of spandex high

In the fourth quarter of 2024, 80kt/year of new spandex units are scheduled to be put into production. Among it, 50kt/year from Huahai has started production in Oct. Hengshen's 30kt/year plant is also starting feeding. Currently, the operating rate of spandex plants was at 83%, medium level in recent years. After capacity continues expanding, the monthly production of spandex has been near the historic high, which is somewhat inconsistent with the above-mentioned demand-side performance.

In the first half of the fourth quarter, price of BDO rallied and then turned to consolidate. However, the divergence between supply and demand remains big in PTMEG and spandex markets. In addition, the operating rate of fabric mills may move down at the end of year, which will end up with dwindling rigid demand for spandex. Spandex suppliers are expected to face pressure in controlling inventory and collecting payment. Price of spandex may be hard to hold steady at the end of year. The inventory of spandex is high in some integrated companies and price may continue declining slightly for large orders. The overall spandex price is anticipated to consolidate near the bottom.