Orient Securities released a research report stating that since 2020, under the industry's capacity expansion cycle, spandex prices have trended downwards, and supply-side operating rates have been affected. Supply-demand imbalances have caused significant volatility in spandex prices. Currently, spandex industry sentiment is at a historical low. With the optimization of the industry landscape, spandex prices and margins are expected to show resilience. On the supply side, currently in mainland China, only the first phase (50,000 tons) of Xinxiang Chemical Fiber's 100,000-ton project is confirmed to be under construction, with an estimated commencement in 2027 based on the construction timeline. On the demand side, with the continuation of sportswear and form-fitting apparel trends, spandex demand is expected to maintain growth. If industry capacity continues to consolidate and supply-demand dynamics improve, spandex industry sentiment is likely to recover. The outlook is positive for leading domestic companies with large-scale capacity and cost advantages. The main views of Orient Securities are as follows:
Spandex is an elastic fiber with excellent performance. Spandex is a synthetic fiber known for its superior elasticity, capable of stretching 5-8 times its original length and recovering quickly. It offers high wear resistance, chemical corrosion resistance, and good tolerance to sweat and oils. Just 3% spandex fiber in a fabric is sufficient to improve its elasticity and shape retention. Consequently, garments requiring greater elasticity typically have higher spandex content, reaching up to 30% in high-performance apparel such as swimwear and activewear. Reviewing spandex prices, the industry's capacity expansion cycle led to price declines. During 2020-2021, pandemic-induced periodic demand surges, coupled with impacted supply-side operating rates, caused significant price volatility due to supply-demand disruptions. Current spandex industry sentiment is at a historical bottom. As the industry structure optimizes, spandex prices and margins are expected to demonstrate elasticity.
Supply Side: End of Capacity Expansion Cycle, Accelerating Capacity Consolidation. Domestic spandex capacity has continued to grow. Industry capacity was 593,900 tons in 2015, expanding to 1.42 million tons by January 2026. Huafon Chemical leads with 475,000 tons capacity, followed by Huahai Zhuji, Xinxiang Chemical Fiber, and Hyosung China in terms of scale. Currently, only the first phase (50,000 tons) of Xinxiang Chemical Fiber's 100,000-ton project is confirmed to be under construction in mainland China, expected to commence operation in 2027. Furthermore, since 2019, small and medium-sized enterprises have continuously exited the market, with cumulative shutdowns exceeding 200,000 tons of capacity. Alongside the exit of small-scale producers, the share of capacity below 50,000 tons dropped from 47% in 2015 to 16% in 2025, indicating ongoing supply concentration towards industry leaders. According to Baichuan Yingfu, since May 2023, the industry's gross margin has remained negative for an extended period. Companies struggling with profitability may find it difficult to sustain operations long-term, increasing the likelihood of further exits.
Demand Side: Spandex Demand Maintains Rapid Growth. In apparel, spandex primarily provides elasticity, and is widely used in casual wear, jeans, underwear, fitness apparel, swimwear, and socks. Leveraging its inherent advantages like high elasticity and weather resistance, spandex significantly enhances key garment properties such as stretchability and durability. Driven by sportswear and form-fitting fashion trends, coupled with declining spandex prices, its penetration in downstream applications continues to increase. Apparent spandex consumption has maintained rapid growth, rising from 510,000 tons in 2017 to 1.027 million tons in 2024, representing a CAGR of 10.51% over seven years. With the ongoing trends in sportswear and form-fitting apparel, spandex demand is expected to continue its growth trajectory.
Related Targets: Huafon Chemical (002064.SZ), Tahe New Materials (002254.SZ), Xinxiang Chemical Fiber (000949.SZ).
Risk Warnings: Industry consolidation may fall short of expectations; the spandex industry may continue capacity expansion; downstream demand may decline; raw material prices could experience significant fluctuations; changes in assumptions could affect calculation results.
