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

3, the supply pattern ushered in marginal improvement, industry concentration continues to increase

Spandex expansion cycle is coming to an end, and the industry supply pattern is expected to improve. In terms of production capacity, from 2012 to 2020, the domestic spandex production capacity increased from 505,000 tons to 948,000 tons, a compound growth rate of 7.4%. In terms of production, the domestic spandex production in 2020 is 758,000 tons, an increase of 1% over the same period, and the apparent consumption of spandex is 682,000 tons, and the industry still maintains an oversupply situation. In terms of operating rate, in recent years, the domestic spandex operating rate has been maintained at about 80%, but the enterprise differentiation is serious, the operating rate of leading enterprises is close to 100%, and the operating rate of small and medium-sized enterprises is generally below 50%. According to Baichuan Yingfu data, it is expected that the new capacity in 21 years has Huafeng Chemical 40,000 tons (put into production in the second half of 21), 22 years of new capacity of 60,000 tons (expected to put into production at the end of 21), including Xinxiang chemical fiber 30,000 tons, Taihe new material 30,000 tons, 21-22 years spandex capacity growth rate of 4%, 6%, respectively. The growth rate of production capacity has slowed down significantly, new production capacity has been put into production in an orderly manner, and the industry supply pattern is expected to usher in marginal improvement.

Looking back at the historical profit cycle and expansion cycle trend of spandex, the driving force of the expansion has changed. Nearly a decade, China's spandex industry after three expansion cycles: 1) 2011-2012, spandex demand recovery growth, the price spread expanded to nearly 30,000 yuan/ton in 2011, driven by high profitability in 2012 spandex capacity growth rate of more than 10%; 2) In 2013-2014, spandex price spread ushered in a stage high again, with a price spread of nearly 22,000 yuan/ton, leading enterprises took the lead in expanding production, and the annual production capacity growth rate exceeded 17% in 2014; 3) In 2019, ammonia production capacity increased by nearly 10%, but the spandex price spread did not show signs of rebound, but remained at 13,000 yuan/ton left and right. It can be seen that different from the passive expansion of enterprises driven by profit in the past, this expansion is the initiative of leading enterprises with cost advantage to expand production to seize market share.

Leading enterprises bucked the trend to expand production, and the industry concentration continued to improve. After 2016, spandex industry profitability continued to deteriorate, small and medium-sized enterprises long-term losses, has not been able to expand production or transformation conditions, high costs have to reduce production, stop production and even apply for bankruptcy. Leading enterprises continue to expand at the bottom by relying on the accumulated capital advantages in the early stage, go against the trend, accelerate to seize market share and consolidate their competitive advantages. With the gap between cost and scale widening, the differentiation of enterprise operating rate is obvious, and the industry concentration continues to increase. By 2020, the total production capacity of spandex is about 890,000 tons, of which the proportion of CR4 (according to capacity caliber statistics) has increased to 59.9%, and the proportion of CR8 (according to capacity caliber statistics) is 79.7%. Huafeng Group, Xinxiang egret, Xiaoxing Group has initially formed a three-pillar structure.

The scale advantage of leading enterprises is prominent, and the living space of small production capacity is limited. From 2016 to 2019, the spandex price spread has been maintained at a low level, and small production capacity enterprises have been gradually eliminated due to high production costs, and only a small number of enterprises have survived with differentiated products. With the continuous expansion of leading enterprises to seize market share, the survival space of small production capacity is squeezed, in 2016, the domestic spandex capacity of more than 100,000 tons accounted for only 18%, and in 2020, it rose to 51%, and leading enterprises have basically occupied half of the country. It is expected that the concentration of spandex industry will continue to increase with the steady expansion pace of leading enterprises, and the small production capacity with higher cost lines will continue to be eliminated, and only some small and medium-sized enterprises can survive in the competition with differentiation strategy.