Recently, Huafeng Group held a groundbreaking ceremony for its annual output of 100,000 tons of differentiated spandex, 100,000 tons of polyurethane resin and 320,000 tons of cyclohexanol. Another leading spandex company, Taihe New Materials On the evening of March 23, the company released its development plan for 2018-2022, planning to invest a total of 7 billion yuan by 2022. It said it is planning to increase investment and comprehensively enhance its international competitiveness in the next five years.
The recent actions of Huafeng Spandex and Taihe New Materials have attracted attention from the outside world.
At present, the price of spandex continues to be sluggish. As of now, other chemical fiber products are experiencing peak season increases. However, the price of 20D spandex in East China fell by about 2.27% compared with the same period last year. The spandex market is so unsatisfactory, one can’t help but wonder, what are the intentions of Huafeng Spandex and Taihe New Materials?
The slump in the spandex market: the growth in demand was quickly met and overflowed by the expanded production capacity
In 2018, the spandex market had a good start ahead of other chemical fiber varieties, but the subsequent market situation has deteriorated. According to price monitoring, as of April 16, 2018, the mainstream quotation of 20D spandex was around 44,000 yuan/ton, which was a thousand yuan drop from the beginning of the year. At present, other chemical fiber products have benefited from the influence of the weaving peak season and have experienced general price increases, while it seems that spandex prices are still in a sluggish trend.
The reason is that the author believes that since 2016, the spandex production capacity has been 662,000 tons, and the apparent demand is about 463,000 tons. Since then, an oversupply pattern has formed. In the past two years, due to the extremely serious homogeneity of domestic products, price competition is still one of the main strategies. The overall profitability of the industry has declined, resulting in a decline in the overall profits of the spandex industry. Industry competition and corporate differentiation have intensified.
Although the overall market sentiment has improved since 2017, due to the huge industry production capacity at this stage, the oversupply situation is difficult to improve. The room for the current price to continue to decline in the later period is relatively limited, and the price low may gradually approach, but the short-term weak market is still difficult to significantly change.
Business format after rapid expansion: small and medium-sized production enterprises “shut down and transfer”, leading enterprises control prices
But it is undeniable that currently, spandex production capacity continues to increase. According to statistics, by the end of 2017, the actual operational domestic spandex production capacity was close to 750,000 tons, an increase of about 6.58% compared with 2016, and the total output increased to 560,000 tons. The production capacity that can be fed in 2018 will increase by 33.9% compared with 2016, reaching 935,800 tons.
But the market has also undergone some changes after the expansion of production.
Due to stricter environmental protection policies, many small and medium-sized enterprises in the spandex industry are facing the situation of “shutdown and transfer”. At present, The industry competition pattern is undergoing major changes. In 2016, the production capacity of enterprises with 40,000 tons and above in my country accounted for 63%. The industry concentration continues to increase. Production capacity has been concentrated in a few leading enterprises. In the future, market competition will mainly be among leading enterprises. As time unfolds, several leading companies will influence the setting of market prices.
Most domestic small and medium-sized enterprises focus on production and not on research. , the situation of weak technical strength will continue for some time. The pressure on small and medium-sized enterprises will increase, and competition in conventional products will become more intense. In the future, it is foreseeable that the spandex industry will remain in a stage of low profit or even loss for a long time. If effective changes cannot be made, small and medium-sized spandex companies will inevitably face a brutal competitive environment.
Therefore, after this round of production expansion, spandex production is becoming more and more large-scale and centralized.
The spandex leader that has never stopped: expansion plans are in full swing, and the market welcomes development opportunities for large-scale enterprises!
Faced with the current situation of large-scale overcapacity in China’s manufacturing industry, many large companies are still adding new production capacity or undergoing mergers and reorganizations every year Reduce production costs through technological advantages, thereby creating economies of scale, eliminating backward production capacity, and enhancing industry status.
From the perspective of industry characteristics, reshuffles are constantly taking place, with small factories below 5,000 tons gradually withdrawing from the market, and 10,000-ton factories gradually withdrawing from the market. The production capacity of large manufacturers continues to expand. At present, the top 10 domestic companies account for 80% of the market share. Huafon and Hyosung occupy the top two spots, and the two companies have not stopped their expansion. The rest include Xinxiang Chemical Fiber’s 60,000 tons/year production capacity, Yadi Ningxia The base’s 30,000 tons/year production capacity, Huahai’s 40,000 tons/year capacity after reconstruction, and Hyosung Phase II’s 30,000 tons/year production capacity are among others.
At the same time, as the “MSG of textiles”, the application of spandex has expanded from traditional functional fabrics to clothing fabrics, from knitwear to woven fabrics, from underwear to outerwear, from textiles to industrial and biomedical industries. Including medical bandages,Health products (such as body shaping, sports knee pads, diapers for children and the elderly), car interiors, leisure sports equipment, and artificial organ materials.
Therefore, regarding the future demand for spandex products, research reports from several leading spandex market leaders generally believe that although the industry is currently washing However, there is still a large market demand potential for spandex to be tapped in the future, so we are optimistic about the long-term development prospects of the industry.
Earlier, Huafeng Spandex also stated that even though some new elastic fibers have appeared on the market, In the short to medium term, the application of spandex is still difficult to be replaced. Spandex yarn will still be the mainstream of elastic yarn, and there is still potential demand space, which will promote further growth of domestic spandex production capacity. In the long run, with the continuous development of spandex application technology, its application proportion will increase significantly, demand will still grow, and the industry will still face good development opportunities. From this perspective, the actions taken by Huafeng Spandex and Taihe New Materials this time are also reasonable.