China spandex booms as demand grows and inventory is low

China's spandex industry is currently riding high. Production facilities are running at near 90 per cent capacity in the first half of 2024, driven by a 10 per cent increase in domestic demand for the first four months of 2024. This growth is driven by trends in activewear and lower spandex prices, leading to its increased use in clothing.

However, storm clouds loom on the horizon. A massive influx of new production capacity is expected in the second half of the year, potentially exceeding demand growth. This could lead to a glut, putting pressure on cash flow and potentially sparking price wars. The impact won't be evenly felt. Large spandex producers are better positioned to weather the storm, with some even expanding their market share. Meanwhile, smaller companies face tighter margins and potentially higher inventory levels.

Looking ahead, several factors could further complicate the market. Inflationary pressures and stricter environmental regulations could disrupt the BDO-PTMEG-spandex supply chain. The industry's future hinges on navigating these challenges. Keeping an eye on macroeconomic factors and adapting to the changing market landscape will be crucial for China's spandex producers.