Edited by Zhao Xinhua

The 2021 earnings preannouncement recently disclosed by several spandex listed companies shows that the net profit has increased significantly year-on-year,and some even increased by more than 200 percent.

From product price increases to corporate operating profits,the overall performance of the spandex sector in 2021 is impressive.What is the supporting force behind the China’s booming spandex market in 2021? What are the new trends of leading companies at this stage?

Product demand exceeds supply,the market price rises and lasts for a long time

Relevant statistics show that in 2021,the annual average price of 40D spandex was 66,977 yuan/ton,up 117 percent year-on-year;the price difference of 40D spandex was 23,007 yuan/ton,an increase of 5,110 yuan/ton year-on-year.The price peak occurred in August,when the price of 40D spandex was as high as 83,750 yuan/ton,up by more than 170 percent.Prices also rose by about 150 percent for much of the year.In particular,the manufacturers were basically out of stock in the second and third quarters,product demand exceeded supply;the market fell back in the fourth quarter.

Business data can be the most intuitive proof of the booming of the market.Huafon Group is one of the leading enterprises in the spandex sector in China.At present,its annual capacity of spandex is about 200,000 tons,and the production and sales were balanced in 2021.

Huafon Group 2021 annual earnings preannouncement shows that during the period,the company is expected to achieve net profit attributable to shareholders of listed companies of 7.85 billion to 8.1 billion yuan,a year-on-year increase of 244.43 percent to 255.40 percent.

2021 annual earnings preannouncement of Yantai Tayho Advanced Materials Co.,Ltd.shows that the company’s spandex business reached a new high during the period.In 2021,the company achieved total operating revenue of 4.406 billion yuan (including aramid business),up 80.48 percent year-on-year;attributable net profit was 975 million yuan (including aramid business),up 274.16 percent year-on-year.

Statistics from the China Chemical Fiber Association show that the spandex sector contributed 23 percent of the total profit of the chemical fiber industry in 2021.The main driving force behind such a hot market is the increase in demand for spandex downstream terminals,which is reflected in many aspects.

First,due to the pandemic,more and more consumers work at home and pay more attention to exercise,which leads to an increase in sales of sportswear,yoga wear and other clothing with high spandex content compared with the past.Second,the production and export of apparel have achieved a recovery growth,driving the increase in demand for spandex,of which,knitting products have increased more.

Data from the National Bureau of Statistics show that from January to November 2021,the output of China’s garment enterprises above designated size was 21.294 billion pieces,with a year-on-year growth of 8.53 percent and a growth rate of 17.28 percentage points higher than the same period last year.Of which,benefited from export driven,the output of knitwear increased by 12.37 percent year-on-year.In addition,according to the statistics of China Customs,from January to December 2021,China’s knitwear exports increased by 42 percent year-on-year and 24.5 percent compared with 2019.

Third,masks have become an indispensable and important consumable in residents’ daily life.As the main material of mask earbands,spandex has a stable demand.Fourth,due to the recurrence of the pandemic,part of the international market orders returned to China.Fifth,the field of spandex is also expanding.At present,the spandex has been gradually expanded from the traditional fields of elastic hosiery and underwear to high-end elastic casual wear,knitted outerwear and other fashion clothing.New industrial fields such as medical spandex,elastic fabric and elastic band are also emerging.

In addition,from the point of view of the support of the raw material end,the sharp rise of BDO price in 2021 also supported for the price rise of spandex.The main raw materials of spandex production are PTMEG and MDI,and the upstream raw materials of PTMEG are BDO.In 2021,due to the ban on single-use plastics,the demand for PBAT increased significantly,driving the price of BDO to rise sharply,thus driving the price of spandex to rise.The industry insiders said that in 2021,the price of BDO was about more than 20,000 yuan/ton at its low point,and reached 48,000 yuan/ton at its high point.

The market is expected to stabilize due to new capacity

Starting from the fourth quarter of 2021,spandex market has a certain decline;in November,the price of spandex began to decline due to the periodical decline of international crude oil price and the weakening of downstream demand.

Statistics from CCFEI show that in November 2021,the average monthly price of 20D spandex was 100,900 yuan/ton,30D spandex was 88,600 yuan/ton,and 40D spandex was 76,300 yuan/ton;in December,the monthly average price of 20D spandex was 89,500 yuan/ton,30D spandex was 79,200 yuan/ton,and 40D spandex was 66,500 yuan/ton.In the middle and late December,the spandex markets in Xiaoshao,Haining ad Guangdong were weak operation,open probability dropped to 40-75 percent.

After the Spring Festival in 2022,spandex market continued to decline.In January this year,the average monthly price of 20D spandex was 76,500 yuan/ton;the average monthly price of 30D spandex was 67,300yuan/ton;the average monthly price of 40D spandex was 57,300 yuan/ton.It can be found that the average monthly price of the representative 40D spandex in January this year decreased by 22,400 yuan/ton compared with the peak of 79,700 yuan/ton in August last year.

At the end of February,the market price of 20D spandex dropped to 71,000 yuan/ton-78,000 yuan/ton;40D spandex market price decreased to 51,000 yuan/ton-58,000 yuan/ton;prices are about the same as last year.At the beginning of March,the supply of spandex market was stable,and the operating rate was about 79 percent.

So,how to think the spandex market in recent period?Will the two-year-long hot market end? Will the following market stabilize?

From the end of last year,China’s spandex market began to enter the stage of rapid expansion.Before the end of this year,the production capacity involved in the new projects of many enterprises is expected to be put into production.Meanwhile,the new project invested by Hyosung Group in Ningxia will also be put into production.With the change of supply and demand,the spandex market is expected to stabilize this year.

According to incomplete statistics,the new capacity of the domestic spandex market is expected to be about 200,000 tons in 2022.During the 14th Five-Year Plan period,China’s spandex production capacity is expected to double,and the production capacity is further concentrated in the leading enterprises.

On the one hand,the competition is getting fiercer,on the other hand,the market is gradually returning to normal.In this regard,industry insiders pointed out:“Enterprises should first keep rational,coordinate the pace between production capacity and market demand;second,we should strengthen the development of new products,increase the variety of differentiation,explore new fields,avoid homogeneous competition,and continuously improve the competitiveness of spandex brands;third,to further improve the intelligent manufacturing,improve production technology,enhance the innovation ability of enterprises,promote the technological progress of the industry;fourth,we need to improve the green manufacturing,reduce energy consumption and promote sustainable development of the industry.”