Since October, the price of spandex, known as “monosodium glutamate” in textiles, has been rising. Industry website data shows that the average market price in October increased by 12.39% from the beginning of the month and 17.13% year-on-year. However, at the beginning of November, after the stagnation of related chemical fiber raw materials, spandex still experienced skyrocketing prices, which surprised industry insiders!
The rise in spandex prices Is it due to the increase in cost and price? Or is it caused by an imbalance between supply and demand? There are big differences in the industry on this.
Xiao Shubin, Secretary of the Board of Directors of Xinxiang Chemical Fiber, told reporters from the Associated Press that the price increase is mainly due to demand. The company’s current production and sales rate is 110%, and last year’s inventory was sold out. Gong Yuqian, an analyst at Zhuochuang Information, believes that the rise in prices is mainly caused by rising costs. The price of pure MDI, one of the raw materials for producing spandex, has increased by more than 60% since August.
In fact, there are differences not only between industries but also capital. The Dragon and Tiger list of leading Huafeng Spandex (002064.SZ) on October 22 shows that three companies in the buyer’s seat and four sellers in the seller’s seat are all institutions.
Raw material push vs. demand pull
During the National Day holiday, a “screenshot of unavailable spandex” was circulated in WeChat groups and public accounts. After the National Day, spandex prices began to jump. According to SunSirs data, the seller’s quotation for Huafeng spandex’s 40D products jumped directly from 32,500 yuan/ton on September 25 to 34,000 yuan/ton on October 9. On October 15, the quotation rose to 35,000 yuan/ton. tons, rising again to 37,000 yuan/ton on October 27; the seller’s quotation of Xinxiang Chemical Fiber’s Egret spandex 40D product rose from 31,000 yuan/ton on October 9 to 32,000 yuan/ton on October 12, and on October 15 It rose another 2,000 yuan/ton, and on October 27, it rose to 36,000 yuan/ton. As of October 27, the average market price increased by 12.39% from the beginning of the month and by 17.13% year-on-year.
There are different opinions on the price increase. Gong Yuqian, an analyst at Zhuochuang Information, told reporters that the increase in spandex prices after the holidays is mainly due to the relatively large increase in upstream raw materials. First, the price of pure MDI has increased significantly. Although pure MDI accounts for 20% of the cost of spandex, the price However, it has increased by more than 60% compared with the beginning of August. The cost pressure on spandex is relatively large. At the same time, the price of PTMEG, another raw material for spandex, has also increased slightly. Therefore, overall, the cost-end support pressure is relatively large. Taking into account operating costs, manufacturers will continue to raise prices.
Xiao Shubin believes that it is more due to rising demand. Adding spandex to fabrics can increase the elasticity and comfort of the fabric. In recent years, there has been a demand for iron-free and anti-wrinkle fabrics with spandex added. Continue to rise. As the price of spandex becomes popular, the amount of spandex added to textiles continues to rise. As demand increases, the price will reflect. The company has raised ex-factory prices several times before following market trends.
The rise in spandex prices may also be due to speculation. In the view of Yuanda C&T Polyester Researcher, the growth rate of social retail products in the apparel sector entered a downward cycle after March 2018, with sales growth declining and destocking actions having been carried out for two years. During these two years, downstream The garment manufacturing industry has realized the flexible transformation of the supply chain and has done a very good job in controlling inventory.
Flexible supply chain increases the supply and demand response speed of the industrial chain and can effectively reduce costs when prices are on a downward trend. But when prices enter an upward trend or expectations of price increases are formed, the entire industry chain will be quickly tightened, and stockpiling will occur at various nodes in the industry chain. A polyester researcher from Yuanda Industrial said that the upstream gray fabric traders in the clothing industry are relatively speculative in the industry. Clothing companies place orders centrally with traders. In addition to feedback of corporate orders to the upstream, traders themselves also speculate.
Differences in the main logic of the spandex price increase have also affected capital’s value judgment on the leading Huafeng spandex. On October 22, Huafeng Spandex’s Dragon and Tiger List showed that foreign investors, which have always been known as “smart money”, bought 46.3716 million yuan and sold 33.2818 million yuan, ranking first in buying and selling at the same time. Location. Also “uncertain” are domestic institutions, with three institutions in the buyer’s seat and four institutions in the seller’s seat.
Is it really out of stock?
A spandex trader in Shaoxing told reporters: “At present, the company does not have much inventory and mainly sells to old customers. In terms of transaction methods, it is now shipped upon payment, but even if the payment is received There may not necessarily be enough goods. Basically, there is a price but no goods. Anyway, the manufacturer is out of stock, and our middlemen are also out of stock. Our actual downstream customers’ inventory is not much, only two or three days’ worth of goods. Where did the spandex go? I can’t figure it out.”
According to the data, spandex refers to polyurethane fiber, which is made of PTMEG and pure MDI.Made of polymerization, it is the “MSG-type” fiber in textiles and the most widely used elastic fiber. At present, my country is the world’s largest spandex producer, accounting for about 65% of the world’s production capacity. The spandex industry has an obvious head effect. In recent years, leading companies in the industry have continued to expand production. From 2015 to 2019, the average annual compound growth rate of domestic spandex production capacity reached 8.19%.
According to estimates, domestic spandex production capacity will reach 872,000 tons in the first half of 2020 (an increase of 2.6% compared with the end of 2019), while the demand in the first half of the year is only 283,000 tons (a decrease of 5.8% year-on-year). In the short term, The oversupply situation is difficult to fundamentally change.
As for the unavailability of spandex, Gong Yuqian told reporters that in September, we did not collect much information about the unavailability of spandex. The main varieties of spandex are 20D, 30D, 40D and 70D. Among them, products with 70D and above are coarse-denier products. The demand is not as large as that of 20D, 30D and 40D. It may be that individual models of spandex are in short supply.
In terms of the industry supply and demand pattern in the second half of the year, Gong Yuqian said that this year’s demand growth rate is generally similar to last year’s, around 6%. It is possible that it is slightly better than last year. The supply side is currently at the new level in 2017. In the process of increasing production capacity, some small factories are also being eliminated. Xiao Shubin predicts that after the new production is put into operation to offset the shutdown, the output this year will reach more than 700,000 tons. When talking about this year’s demand outlook, Xiao Shubin avoided the issue. He said that China is the world’s largest fiber producer. About 70% of the fibers are produced in China. The various fibers are about 60 million tons. The proportion of spandex used is If you increase it a little bit, the demand will increase a lot.
Data show that in the A-share market, the main targets of spandex are Huafeng Spandex, Xinxiang Chemical Fiber and Taihe New Materials (002254.SZ). In terms of new production capacity, Gong Yuqian introduced that Huafeng Spandex has a production capacity of 30,000 tons this year, and 40,000 tons of production capacity will be launched next year; Xinxiang Chemical Fiber has made a production capacity plan of 100,000 tons. After 2021, Taihe New Materials will also have a production capacity of 15,000 tons. </p
