Spandex, known as the “monosodium glutamate” in the textile industry, has continued to rise in price recently and is rapidly “out of the market”, attracting attention from many parties.
No, it’s crazy again this week! It is understood that following a spandex factory’s price increase of 2,000-3,000 yuan/ton on the 15th, Newstar, Taiguang Spandex, etc. also issued price increase notices, with prices rising by 4,000 on 20D and 3,000 on 30D, which will be implemented on the same day!
According to data from SunSirs, at present, the spot supply of spandex in Shandong, Zhejiang, Jiangsu, Fujian and other places is still tight, and early orders continue to be handed over, and some manufacturers are temporarily not accepting new orders. Mainly for high-quality customers. In terms of price, on July 12, the price of 40D spandex was 77,000 yuan/ton, an increase of 1,600 yuan/ton from the price in early July, an increase of 9,400 yuan/ton from 3 months ago, an increase or decrease of 13.91%, and an increase of 13.91% from the average price in the same month last year. An increase of 156.34%. The overall price of 40D spandex is on an upward trend.
Currently, the price of spandex has reached a new high in 10 years. An industry insider who has been in the industry for many years lamented that the price of spandex has also been ups and downs over the years, but it has rarely exceeded 60,000 yuan/ton, and it has never been seen like this round of sustained price increases.
So, what caused the current round of spandex price increases? What is the future trend of spandex prices?
The relationship between supply and demand is tight and the applicable fields of spandex are strong
With the change in consumption concepts and the upgrading of consumer demand, consumers have more and more demands for sports and leisure clothing, and their functional requirements for clothing are getting higher and higher. Fabrics containing spandex are widely used in professional sportswear, swimwear, and protective clothing because of their excellent elasticity, acid and alkali resistance, sweat resistance, seawater resistance, and wear resistance, making spandex elastic fabrics more and more popular in the market. The price increase of spandex this time is inseparable from the support of demand. The shortage of spandex supply in the market and low factory inventory have driven its price to further rise.
“A very important reason for the increase in spandex prices this time is that the relationship between supply and demand is tight.” Gong Yuqian, a spandex industry analyst at Zhuochuang Information, told reporters that on the demand side, after the epidemic, domestic textile and apparel The recovery in demand coupled with the transfer of foreign orders has driven the growth in demand for spandex. On the supply side, due to the downturn in spandex prices in the past few years, the industry has accelerated reshuffling, many old production capacities have been eliminated, and the spandex supply and demand pattern has changed from overcapacity to tight supply.
Spandex companies have clearly experienced the growth in demand. “After the epidemic, we clearly felt that downstream customers in the medical field such as mask earbands and protective clothing had a significant increase in demand for spandex. Previously, this part of the market was small.” Liu Jianning from Taihe New Materials Securities Department told reporters that the epidemic has caused people to spend more time at home. , the increased health awareness has led to the increase in the application of spandex in home sportswear and casual sportswear, as well as relatively sufficient orders in the textile industry, both of which have driven the rapid growth of spandex demand.
In addition to the growth in domestic demand, due to the impact of the COVID-19 epidemic, the exports of the garment industry in Southeast Asian countries have shrunk severely, and some textile orders have been transferred to China, further boosting the demand for spandex. Customs statistics show that from September 2020 to May 2021, my country’s cumulative export volume of textiles and clothing was US$216.725 billion, a year-on-year increase of 13.74%, of which the cumulative export volume of textiles was US$105.230 billion, a year-on-year increase of 6.47%; the cumulative export volume of clothing was US$105.23 billion, a year-on-year increase of 6.47%. It was US$111.495 billion, a year-on-year increase of 21.56%. Especially from January to May this year, my country’s cumulative apparel export volume was US$56.612 billion, a year-on-year increase of 48.33%.
“The growth in demand for spandex can also be verified from the operating rates of downstream looms.” Gong Yuqian told reporters that as of June 24, the operating rates of circular knitting machines and warp knitting machines in Zhejiang were respectively were 61% and 87%, an increase of 11 and 17 percentage points respectively compared with the same period last year. In the first half of 2021, the operating rates of circular knitting machines and warp knitting were 53% and 72% respectively; while in the same period of 2020, affected by the epidemic, the operating rates of circular knitting machines and warp knitting were only 33% and 34%.
“In addition, the increase in raw material prices is also an important factor in the increase in spandex prices.” Gong Yuqian said that in the first half of this year, the average price of PTMEG, the main raw material for spandex, reached 34,515.5 yuan/ton, which was 34,515.5 yuan/ton compared with the same period last year. An increase of 99%, and the average price of another raw material, MDI, also increased by 55%. The rising cost is an important support for the price increase of spandex.
Downstream demand continues to be strong
Leader Corporate performance has soared
Against the backdrop of a good market, the performance of spandex manufacturing companies is naturally very impressive. One of the leading domestic spandex companies, Taihe New Materials announced its semi-annual performance forecast on the evening of July 6. The company expects to achieve a net profit attributable to shareholders of listed companies in the first half of 2021 of 400 million to 450 million yuan, a year-on-year increase of 222.45%~ 262.76%. The announcement stated that since the beginning of this year, demand in the spandex industry has continued to be strong, production capacity concentration has increased significantly, spandex sales prices have continued to rise, and profitability has increased significantly year-on-year.
On July 9, Huafeng Chemical (002064.SZ) released its 2021 semi-annual performance forecast, stating that the company expects to achieve a net profit attributable to shareholders of listed companies in the first half of the year of approximately 3.6 billion to 3.9 billion yuan, an increase of 441.31% to 486.42% over the same period last year.
Financial data shows that in 2020, the company achieved operating income of 14.724 billion yuan, a slight increase of 6.81% year-on-year; the net profit attributable to shareholders of the listed company was 2.279 billion yuan, a year-on-year increase of 2.279 billion yuan. An increase of 23.77%; after deducting non-recurring gains and losses, its profit was 2.194 billion yuan, a year-on-year increase of 348.6%3%. In the first quarter of 2021, its operating income increased by 120.77% year-on-year to 5.794 billion yuan, and the net profit attributable to shareholders of listed companies increased by 501.67% year-on-year to 1.64 billion yuan.
Based on this estimate, Huafon Chemical’s profit in the first half of the year exceeds that of the whole of 2020. At the same time, rough estimates show that in the second quarter of this year, the company is expected to achieve net profits attributable to shareholders of listed companies of approximately 1.96 billion to 2.26 billion yuan, an increase of 19.51% to 37.8% from the first quarter.
Regarding performance growth, Huafeng Chemical explained that during the reporting period, the industry’s downstream demand recovered and the prosperity continued to rise. The production, sales and sales prices of the company’s leading products in the first half of 2021 were relatively high. There was a significant increase in the same period last year; at the same time, the company strengthened cost and expense control and effectively resolved the fluctuation of raw material prices. The company’s overall gross profit margin increased significantly, and its operating conditions and profitability achieved significant year-on-year growth.
On July 12, Xinxiang Chemical Fiber released a performance forecast. The company expects to achieve a net profit of 710 million to 760 million yuan in the first half of the year, an increase of 2394.14% to 2569.79% over the same period last year. , net profit in the same period last year was 28.4667 million yuan. Although it was affected to a certain extent by the low base in the same period of 2020, the net profit of more than 700 million yuan in the first half of the year was full of gold.
“Due to the continued growth in basic demand in the spandex industry during the reporting period, the sales price of the company’s main product spandex fiber increased significantly compared with the same period last year, sales increased significantly, and the gross profit margin of the spandex business increased significantly. The company’s semi-annual performance increased significantly compared with the same period last year.” Xinxiang Chemical Fiber’s performance forecast pointed out.
Industry inventories continue to decline
Spandex Prices may reach new highs
Currently, my country is the world’s largest producer and consumer of spandex. According to the “2020 Spandex Industry Chain Annual Report” released by China Chemical Fiber Information Network, the 2020 global spandex industry chain annual report Spandex production capacity is 1.223 million tons, of which China’s domestic production capacity accounts for approximately 71%.
The price increase of spandex is so strong this year, mainly because the growth rate of spandex production capacity is lower than the growth rate of terminal demand. Spandex production capacity increased from 165,000 tons in 2004 to 785,500 tons in 2018; by 2019, China’s spandex production capacity reached 849,500 tons, a year-on-year increase of 8.1%; last year, China’s spandex production in 2020 was 871,500 tons, an increase of only 22,000 tons , a year-on-year increase of 2.59%.
In recent years, my country’s apparent consumption of spandex has increased year by year, reaching 681,000 tons in 2019. In 2020, China’s apparent demand for spandex increased to 782,900 tons, a year-on-year increase of 14.97% . In addition, spandex exports have also affected domestic spandex supply. According to statistics, China’s spandex exports in 2019 were 74,000 tons, a year-on-year increase of 28.2%; in 2020, China’s spandex exports were 78,500 tons, a year-on-year increase of 6.08%, and the supply side was 2.59 % growth rate, compared with the 14.97% growth rate on the demand side and 6.08% growth rate on the export side. A situation of “supply exceeding demand” is forming, and the booming production and sales will naturally promote the expansion of enterprises.
Since this year, Huafeng Chemical has accelerated the pace of production capacity expansion. On May 14, Huafon Chemical released a plan for the non-public issuance of A shares in 2021, stating that the company plans to non-publicly issue no more than 1.39 billion shares to no more than 35 specific investors (not exceeding the company’s total share capital before this issuance). 30% of the total), the total amount of funds raised this time will not exceed 5 billion yuan, which will be used to invest in the construction of a differentiated spandex expansion project with an annual output of 300,000 tons (2.8 billion yuan) and a 1.15 million tons/year adipic acid expansion project (phase six) ) (2.2 billion yuan).
Although the production capacity of many leading companies is already under construction, the latest production will have to wait until the end of November this year. The current supply shortage of spandex is still unavoidable. Especially in the peak season in the second half of the year, it is inevitable that the price of spandex will rise, and the fabric will follow suit.
In addition, the global epidemic is still ongoing, and the demand for spandex for epidemic prevention materials such as masks, protective clothing, medical bandages, etc. will also increase in the future. Even if new production capacity is put into operation by the end of the year, it may be difficult to meet the new terminal demand. “Currently, industry supply and demand are still very tight, and industry inventories continue to remain at the lowest level for 12 to 14 days.” Guosen Securities analysts believe that the future expansion of the spandex industry will mainly focus on the leading manufacturers in the industry, and the launch of new production capacity will mainly focus on In the second half of the year, the spandex industry will still maintain a high degree of industry prosperity in the second half of this year, and product prices may still hit a new high in the third quarter. “As of now, the effective domestic production capacity is about 870,000 tons. Although there are many plans to add production capacity, they are mainly concentrated at the end of the year or next year. The spandex boom is expected to continue in the short term.” Gong Yuqian said that if the new production capacity is implemented as planned, by the end of 2021 It is expected to reach 1 million tons, with a growth rate of close to 15%, which will effectively alleviate the tight spandex production capacity. </p
