Xiangcai Securities: The supply and demand pattern of spandex is expected to improve, and the industry's prosperity is likely to enhance in the future

According to the Zhitong Finance APP, Xiangcai Securities released a research report stating that spandex is a high-performance chemical synthetic fiber characterized by high elongation, low elastic modulus, good fatigue resistance, low density, corrosion resistance, and aging resistance. In recent years, with the weak prosperity of spandex, it is expected that outdated production capacity in the industry will gradually exit, and new production capacity will be delayed. On the demand side, with future consumption upgrades, the penetration rate and addition ratio of spandex are expected to increase, leading to a growth in demand. The supply-demand pattern of spandex is expected to improve, and the industry's prosperity is likely to enhance. This is the first coverage, and the industry is given an "overweight" rating.

The main points of Xiangcai Securities are as follows:

The supply-demand pattern of spandex is expected to improve

Spandex is a high-performance chemical synthetic fiber characterized by high elongation, low elastic modulus, good fatigue resistance, low density, corrosion resistance, and aging resistance, making it an excellent textile raw material. Adding a small amount of spandex to fabrics can significantly improve their performance and elevate their quality, making it synonymous with comfort and fashion. Spandex is mainly composed of PTMEG and MDI, and is primarily used in various textile products, such as sportswear and swimsuits.

In the context of weak spandex prosperity, outdated production capacity in the industry is exiting, and new production capacity is delayed

On the supply side, according to Huafon Chemical's 2024 annual report, China is the world's largest producer of spandex. However, due to the rapid expansion of China's spandex industry in recent years, the supply has exceeded demand, coupled with weak cost support, leading to spandex price spreads being at historical low levels and weak prosperity. Against this backdrop, outdated production capacity in the industry is expected to gradually exit. According to the China Polyurethane Industry Association, on July 31, South Korea's Taekwang Industrial announced that its board of directors has resolved to cease operations of its subsidiary Taekwang Chemical Fiber (Changshu) Co., Ltd. Taekwang Chemical Fiber (Changshu) has an annual production capacity of 27,000 tons of spandex and has suffered significant losses in recent years. Additionally, some new production capacities in the industry are being delayed. Huafon Chemical announced at the end of 2024 that it plans to adjust the annual production capacity of its "300,000-ton differentiated spandex expansion project" from 300,000 tons to 250,000 tons, of which 100,000 tons have officially reached production, while the remaining 150,000 tons are still under construction. The date for all capacities to reach the predetermined usable state has been postponed from February 2025 to December 2026. On the demand side, with future consumption upgrades, the penetration rate and addition ratio of spandex are expected to increase, leading to a growth in demand. The supply-demand pattern of spandex is expected to improve, and the industry's prosperity is likely to enhance.

Risk Warning

Risks include demand for chemical products falling short of expectations, significant fluctuations in raw material prices, and deterioration of product competition patterns