Spandex prices have continued falling in the past weeks in China, over a lack of demand from downward processors. PTMEG prices have stayed firm but MDI prices have suddenly plunged after previously rebounding. Spandex prices could now further drop until weakest units will be shut down.
Spandex prices have continued falling in the last weeks in China, over a lack of demand from downward processors.
Clothing retail sales are depressed, and inventories are piling up at fabric plants.
Benchmark 40D spandex has lost 1,000 yuan per metric ton in the last four weeks or 3.1%, even sliding 5.6% in dollar terms, due to the fall of the renminbi.
Prices are down 10% in yuan terms from a year earlier.
If considering our 10-year historical chart below, spandex is entering very low levels.
After rebounding for a while in 2016 and 2017, prices have begun again falling in 2018 and could now continue sliding in the remainder of 2019.
The rise of operating rates in the first months of the year has resulted in excess supplies on the Chinese market.
New capacities have also been launched, therefore pressuring market prices.
Falling MDI prices
Raw material costs are moving into different directions.
PTMEG prices have been firm in the last weeks, probably due to the high level of spandex production in the current period.
MDI prices have rebounded in March before stabilizing in April and eventually plunging in May.
After losing 12.9% in the last four weeks, prices are now back to their level in the first two months of the year.
Any decline of raw material costs in the coming weeks would leave room for further lowering spandex prices.
On the other hand, margins have heavily dropped at spandex plants, meaning that operating rates could fall.
The structural concentration of the spandex industry would be accelerated by a new crisis ahead, with smallest and oldest units further disappearing whereas new plants are being set up in the Western part of the country, far from environmental inspections.
Source: Emergingtextiles
