On the one hand, affected by the uncertainty in the post-holiday market, on the other hand, the restart of equipment has intensified concerns about supply pressure on the supply side. Since mid-February, the prices of bulk textile raw materials, led by PTA and MEG, have begun to decline, causing Industry insiders were caught off guard. At the same time, the weak financial situation and commodity market atmosphere have also increased the decline of the polyester raw material market to a certain extent. The polyester raw material market in late February can be described as a disaster.
While people in the industry are confused about the recent sharp correction in the market, many companies have recently raised the price of spandex collectively, uncharacteristically. On the 28th, nearly 10 spandex companies including Hengshen, Huafeng, Duzhong, Taiguang, and Yadi collectively raised prices. The price increases for 20D/30D/40D varieties ranged from 2,000 yuan to 3,000 yuan per ton. Since the fourth quarter of last year, some prices have increased. The company’s cumulative increase exceeded 10%. The increase notice shows that rising raw material costs and low market inventory are the main reasons for this round of price adjustments.
Why did spandex have such a large-scale price increase when the market was silent?
1. The shutdown of world-class MDI production equipment has caused concerns about the supply of raw materials;
According to media reports, the global polyurethane leader BASF’s MDI plant in Chongqing with an annual output of 400,000 tons will be temporarily shut down from now on. In addition, the company’s other world-class MDI production facility in Yeosu, South Korea will also be shut down for a few days in mid-March. At the same time, South Korea’s Kumho’s MDI plant with a production capacity of 240,000 tons will also maintain its operating rate at 60 to 70% due to raw material supply problems; Tosoh Japan’s three units with a production capacity of 400,000 tons will supply Tosoh Ruian’s in 2017. The 80,000-ton MDI plant mother liquor is mainly used. The shutdown of many production facilities such as world-class MDI companies has caused spandex companies to worry about the supply of raw materials.
2. The increase in raw materials far exceeds the increase in spandex, and the cost faces a big challenge
Since October 2016, the chemical fiber raw material market has experienced significant growth. Among them, products such as pure MDI and PTMEG have experienced even greater growth due to the impact of foreign emergencies, while the spandex industry has been subject to the continuous expansion of production capacity in recent years. With the increase, the right to speak in price adjustment is particularly weak. According to statistics monitored by China Silk City Network, the average annual loss of spandex products in 2016 was more than 2,000 yuan/ton, and the increase in spandex raw materials has put great pressure on the production cost of spandex. Originally Spandex companies that have suffered repeated losses are also forced to raise prices. As of now, the price of spandex is around 33,000 yuan/ton, a rebound of nearly 20%. Within this range, MDI has increased by more than 60%.
3. Elastic fabrics welcome the peak demand season, and low inventory provides support to spandex companies
Since the second half of last year, the downstream weaving market has gradually recovered, and most companies have been able to clear out their gray fabric inventories for many years. While the inventory was cleared, the market order situation has also improved significantly, which has triggered a wave of purchases of chemical fiber raw materials. Now that the traditional weaving peak season in March has arrived, the improvement in fabric market orders has also driven demand in the raw material market.
On the other hand, elastic fabrics have been selling well since last year, and the demand peaked at the end of last year. According to market understanding, the start-up load of circular knitting machines in Jiangsu and Zhejiang is gradually recovering, currently at 50-60%, while the packaging load The overall yarn load is around 70%, and some weaving companies have reported that orders for elastic fabrics have been received at the end of April. The purchase wave of spandex products has also kept the raw material inventory of spandex companies at a low level, and has also provided support for the price increases of spandex companies. .
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