Spandex: The supply and demand pattern ushered in marginal improvement, and the industry prosperity continued to pick up

The epidemic has prompted demand for epidemic prevention materials, and apparent consumption and exports of spandex have continued to increase. In 2020, due to the impact of the new coronavirus epidemic, the global demand for epidemic prevention materials has grown rapidly, and China's textile industry has rapidly adjusted its production strategy to achieve upstream and downstream supporting, producing and transferring a large number of epidemic prevention materials to meet the global concentrated and large demand. In the context of foreign production capacity limited by the deterioration of the epidemic, a large amount of demand has been transferred to China. Since the second quarter, textile and clothing exports have increased significantly, mainly driven by textile anti-epidemic materials, spandex as one of the raw materials for masks, and demand has increased significantly. In 2020, the apparent consumption of spandex in China is about 680,000 tons, an increase of 5%. Domestic spandex exports were 65,000 tons, up 4% year-on-year. Since 2021, the prospect of the epidemic situation abroad is still unclear, the demand for epidemic prevention materials is expected to continue to grow, and the export volume of spandex is expected to maintain a high growth. According to Longzhong Information forecast, China's 2021 spandex exports are expected to be about 75,000 tons, an increase of 15%.

With the recovery of overseas demand, demand for spandex has grown rapidly since June 2020. In the first half of 2020, the new coronavirus epidemic swept the world, causing a major impact on the economic and trade patterns of countries around the world, China's textile and clothing exports continued to face the dilemma of order cancellation and reduction in the second quarter, and spandex exports fell sharply in the second quarter. In the second quarter of 20 years, the epidemic situation in China was basically controlled, and the economic operation returned to normal, while the overseas epidemic situation worsened, which led to a substantial increase in the export of textile clothing in China. Driven by overseas demand, China's spandex demand has grown rapidly since June 20, and the monthly apparent consumption and export volume of domestic spandex are significantly higher than the level of the same period last year.

Spandex inventory is at a low level and is expected to usher in a replenishment cycle

20 years spandex industry experienced a tired library to library, is expected to usher in the replenishment cycle. Affected by the epidemic at the beginning of 20 years, the operating rate of the downstream loom plummeted, most domestic enterprises stopped production, personnel isolation and logistics were blocked, downstream demand was greatly depressed, and spandex inventory rose rapidly in the first quarter of 20 years, and the inventory reached 92,000 tons in mid-April. In the second quarter, the domestic epidemic gradually controlled, production and sales were repaired, spandex inventory declined rapidly, and the inventory dropped to 62,000 tons in early May, but the demand was under pressure due to the cancellation and reduction of downstream textile orders, and the inventory continued to rise from May to August. Since June 20, the recovery of overseas demand has led to a rise in domestic spandex demand, spandex inventory has continued to decline since mid-August, as of early March 21, spandex inventory has dropped to 25,000 tons, at a historic low, the industry ushered in strong replenishment expectations, under the expectation of continued recovery of overseas demand, domestic spandex is expected to usher in a replenishment cycle.

Spandex price spreads rose to historic highs and profitability improved significantly

Spandex prices have continued to rise since October 2020, with spreads rising to historic highs. In the first half of 2020, spandex market prices were relatively stable. However, after entering the second half of 2020, the recovery of overseas demand led to the rapid rise of domestic textile demand, spandex inventory continued to decline, spandex prices showed a rapid rising trend, and spandex 40D prices continued to rise from 28,000 yuan/ton in mid-August to 45,500 yuan/ton on April 2, 2021. Spandex 40D price spread since the second half of 20 years also showed a continuous upward trend, profitability improved significantly, cut to April 2, 2021, spandex 40D price spread rose to 24004 yuan/ton, in the historical ten-year 98% quanta, the industry boom quickly rebounded.

Raw material prices continue to rise, the cost side to support spandex prices. PTMEG is the main raw material cost of spandex, driven by the rise in the price of upstream raw materials BDO, PTMEG prices have continued to rise since August 20. The price of BDO rose from 7575 yuan/ton in early August 20 to 29,200 yuan/ton in early April 21, an increase of 285%, while the price of PTMEG rose 156% in the same period, and the price of pure MDI rose sharply from August to mid-October. Rising upstream raw material prices combined with downstream demand recovery, spandex prices and price spreads have risen rapidly since October 20. In 2021, the global crude oil market is expected to maintain a tight balance, crude oil prices are expected to remain in the $55-65 / barrel range, spandex raw material prices are expected to maintain an upward trend, and the cost side supports spandex prices to continue to rise.