Huafeng Chemical announced on April 25 that part of the 300,000 tons/year differentiated spandex expansion project of the company’s controlled subsidiary Chongqing Spandex Construction’s non-public offering investment project has been completed, of which 100,000 tons/year has been put into trial operation recently.
Since the first quarter of 2023, spandex production capacity has increased significantly. Affected by factors such as the acceleration of shipments in the first quarter and the recovery of cash flow, the production capacity of new spandex devices that was delayed last year has been accelerated. The industry supply is still increasing steadily, and the spandex industry load Construction starts remain high. The industry predicts that the domestic spandex industry output will reach 225,000 tons in the second quarter, an increase of 15.98% from the first quarter and an increase of 6.6% year-on-year in 2022.
The negative mentality in the spandex market has increased, and prices have fluctuated downwards since March. As of April 26, the average market price of 40D was 35,125 yuan/ton, down 10.22% from the beginning of March. With the entry of new production capacity into the market, the output of the domestic spandex industry is expected to reach 225,000 tons in the second quarter, an increase of 15.98% from the first quarter and an increase of 6.6% year-on-year in 2022. The oversupply of spandex continues, and downstream consumption levels are weak. Coupled with the fact that textile demand in the second quarter has entered the off-season, spandex prices will still maintain a downward trend.
The demand side is relatively weak at home and abroad. According to customs data, the cumulative export volume of spandex from January to February was 10,476.82 tons, -36.39% year-on-year, a sharp decline year-on-year. Export prices have weakened and foreign trade orders have been insufficient. Some domestic downstream weaving terminal factories are preparing to shut down for holidays, and the pessimism is strong. The current comprehensive operating rate in Jiangsu and Zhejiang is below 55%. In the short term, only rigid demand will be maintained, and there is no plan to prepare large goods. In terms of downstream demand performance, there is insufficient follow-up of new orders for spandex downstream weaving, and the load has dropped slightly; the current load of circular knitting machines in Jiangsu and Zhejiang has dropped to over 40%, and that in Chaoshan is over 70%; the load of covered yarn and Guangdong warp knitting is at 6-7 Become the main machine; Haining warp knitting, Changle lace and Foshan circular knitting machines operate with low load at 30-40%. Entering April, the inventory accumulation slope of spandex factories is still high. As of last Friday, supplier inventory has risen to about 41 days. The inventory pressure of regular specifications products is obvious, and the supply of a few high-needle and high-density products is slightly tight.
Mainland spandex production capacity and reduction trend chart
The negative feedback of the weak recovery of the terminal is transmitted upstream. The spandex factory has lowered its price but it is still difficult to change the volume and the pressure on production and sales is still there. On top of the raw material end, PTMEG still has bearish expectations. The spandex unit has been reduced and suspended since mid-April. As of last Friday, the load of the spandex industry had dropped significantly to 81%, 4 percentage points lower than the previous high, and the total industry reduction and suspension volume was approximately 240,000 tons.
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