According to Zhuochuang data monitoring, the domestic spandex market will enter a new round of capacity expansion in the next five years. About 500,000 tons of differentiated spandex devices are planned to be put into operation, accounting for 56% of the existing production capacity. In recent years, the contradiction between supply and demand in the spandex industry has not been significantly improved, and the relationship between supply and demand in the domestic spandex market may be greatly tested in the future. The spandex industry pattern is gradually taking shape, the CR5 industry concentration has risen from 68% to about 76%. This article will give you an in-depth interpretation of where the market will go after the huge changes in the industry’s capacity structure.

Review of spandex capacity expansion

 

Looking back, domestic production capacity is divided into an expansion period and an integration period. The peak period of expansion is basically divided into two stages:

1. From 2003 to 2005, the industry added more production capacity, and the new production capacity during the year was about 50,000 tons;

 

2. From 2014 to 2016, the focus was on the expansion of factory capacity, adding about 140,000 tons of new capacity; the industry integration period was mainly concentrated in 2017-2019, some domestic spandex enterprises gradually eliminated outdated production capacity, and the industry development boom declined, Spandex prices have been hovering at the bottom for a long time.

 

2020 capacity structure analysis

 

The production capacity concentration of the spandex industry continues to increase, and top companies are mainly concentrated in listed companies. According to the analysis of the financial reports of listed companies, operating profit has gradually increased in the past five years, from -295.69 yuan in 2015 to 2,132.12 yuan in 2019. As of the end of September 2020, operating profit was 1,460.44 yuan, and operating profit showed a main upward trend. However, the homogeneity competition in the spandex market has intensified. Leading enterprises have certain advantages in production and are gradually migrating to the west. Various policy supports have brought certain impetus to the development of the spandex industry.

 

The new round of capacity expansion may cause certain changes in the capacity structure, and the state of supply and demand is still in oversupply. Since the 2020 public health crisis, there are optimistic expectations for 2021 in terms of macro policy and terminal market demand, after the speed of spandex capacity expansion increases, the growth rate of terminal demand may be less than expected, or even lower than the supply rate, so the price may shift downward gradually, and competition among enterprises is fierce.

 

From the production statistics table, the position of leading domestic spandex enterprises is basically finalized, and the industry concentration continues to increase. The market share of top 5 enterprises accounts for about 76%. In the future, new production capacity will still be dominated by leading enterprises, and the production capacity distribution pattern has not changed much, pay close attention to the progress of new capacity release.

 

In the future, new production capacity will be put on the market in phases, but the plans of each spandex manufacturer are different. In the next five years, about 500,000 tons of new production capacity will be released, which will have a certain impact on the market, and market competition will become more intense, rather than blindly fighting a price war. However, from the perspective of supply and demand, the foreseeable growth rate of production capacity is greater than the growth rate of demand. Given the current imbalance between supply and demand, there will be a trend of further intensification in the future.

 

From the perspective of the price increase of chemical fiber products in the second half of 2020, the price increase of spandex is greater than that of other chemical fiber products. Not only the cost, but also the follow-up of terminal demand, coupled with the tight supply of spandex manufacturers, promote the price of spandex. This year’s new spandex production capacity is small, due to the concentrated expansion of production capacity in the past few years, and the contradictory relationship between the current demand after the release, and it has also triggered various speculations in the industry about the new round of spandex prices and the continuous cycle of the rise. From the perspective of downstream industry performance , The downstream demand shows signs of picking up slightly, and industry professionals are optimistic about the future development of spandex.