Tianfeng Securities·2025-08-13 05:43Investment Rating - Industry rating is Neutral (maintained rating) [1] Core Viewpoints - The domestic spandex industry is highly concentrated, with a current price running at a relatively low level. China is the largest producer and consumer of spandex globally, with production capacity increasing from 89,000 tons in 2003 to 1.35 million tons by 2024, accounting for 77% of global capacity [4][15]. - The industry is currently experiencing an average loss, with the average gross profit per ton of spandex showing a loss of approximately 6,000 yuan, marking a cumulative loss period of 3.5 years [6][24]. - The demand for spandex has been growing rapidly, with the apparent consumption increasing from 121,000 tons in 2005 to 1.027 million tons in 2024, reflecting a CAGR of 11.9% from 2005 to 2024 [8][30]. Summary by Sections 1. Industry Overview - The spandex industry in China is highly concentrated, with the top five producers (CR5) accounting for 79% of the total capacity, which has increased from 61% in 2019 [5][18]. - The industry has faced challenges due to increased supply and tariff policies affecting downstream demand, leading to prices reaching historical low levels [6][24]. 2. Production and Capacity - As of 2024, the total spandex production capacity in China is approximately 1.07 million tons, with major producers including Huafeng Chemical, Xiaoxing China, and New Xiang Chemical [5][18]. - New capacity additions are being delayed or reduced, and there is an expectation of continued capacity elimination in the industry [7][28]. 3. Demand Dynamics - The demand for spandex has been robust, driven by trends in fashion and comfort, with a significant increase in consumption over the years [8][30]. - The spandex market is characterized by a strong growth trajectory, with increasing penetration in various applications [8][30]. 4. Cost Structure and Competitive Landscape - The production cost of spandex varies significantly among companies, with energy consumption and depreciation being key factors affecting cost differences [9][40]. - Companies like Huafeng Chemical and New Xiang Chemical are highlighted as having competitive advantages due to their scale and cost structure [39][41].