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Insight | Time:Dec 1 2017 1:53PM
How will spandex market move in Dec?
 
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Price of spandex increased apparently since the fourth quarter of 2016. Spandex 40D hiked to current 38,000yuan/mt from the low level 28,300yuan/mt in the Q4 2016, with increment at around 34.3%. Recently, downstream weavers witnessed decreasing run rate and slower sales, shrinking demand for spandex, but supply of spandex was mounting slowly. Supply/demand gap enlarged further. How will spandex market fare in Dec?


New spandex units started operation intensively in Q1 and Q4 2017, with overall supply to grow by more than 10% in 2017. Spandex production is expected to increase to around 570kt in 2017 from 500kt in 2016. Current run rate of spandex industry was basically flat with that in late-Nov 2016. Operating rate of Yantai Tayho accumulated apparently; Ningxia Yuelong’s partial unit ran stably and started selling goods; Zhejiang Sihai is supposed to restart production in Dec after finishing technology upgrade. Supply of spandex is anticipated to hit yearly new high in Dec.


Price of spandex curved uptrend on the whole in 2017 but declined in Q2 and early Q3, and inventory of spandex was mounting. From end-Jul to Sep, stocks of spandex slipping when run rate of spandex industry dipped and downstream demand was moderate, but inventory started growing from late-Oct when downstream plants saw slipping operating rate, lower demand and slower sales. Inventory of spandex is likely to rise slowly in Dec.


Operating rate of downstream weavers was higher than the same period of last year from mid-Jun to early-Nov, but weavers chose to retreat to sideline when orders decreased and higher feedstock price, unwilling to hoard up inventory. Orders of downstream weavers affect spandex market greatly. Most market players expect downstream weavers to see worse business in Dec.


As for market trend, supply of spandex is supposed to increase in Dec when new spandex plants are scheduled to start operation intensively, while downstream demand is anticipated to diminish further. Coupled with capital-recouping in year end and the treatment of early products in new plants, price of spandex may be hard to rise in Dec like last year, more likely to slip, and decrement of goods with high price earlier may be bigger.
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