Spandex: production curtailment on the way with plunging prices

Price of spandex accelerated falling from mid-Nov. According to the data from CCFGroup, price of spandex 40D dropped by 17% to 65,000yuan/mt in mid-Dec from 78,500yuan/mt in Aug-Sep. Some spandex 40D discussed in Aug-Sep was even above 80,000yuan/mt and some low-end ones have reduced to near 60,000yuan/mt now, with the disparity as high as around 20,000yuan/mt.

Although price of spandex has not returned to the level at the beginning of year, the price spread between spandex and its major feedstock has been close to the level in early-2021. In addition, the stocks of spandex have apparently increased to above 20 days and tend to rise further.

The rigid demand for spandex is expected to shrink apparently as downstream plants may successively start Spring Festival (Feb 1) holiday from Jan. Spandex companies are estimated to see higher stocks with modest demand.

Spandex enterprises are likely to control production periodically amid weaker demand, mounting stocks and high cost. Some plants have heard to scale down operation recently. Some plants may start reducing output before the Spring Festival holiday when price is close to the cost line, the inventory is piling up and stable-and-firm feedstock market. Meanwhile, the launch of new units which are scheduled to start operation in the first quarter of 2021 may be postponed.