Continuity of the boom: Huafeng Spandex production at full capacity

Spandex was one of the chemical products that attracted the most attention last year. For this reason, the judgment of the industry leading trend of Spandex, the leading enterprise of spandex, has received extensive attention from the market. Recently, when interviewed by institutional investors, the company’s secretary of the board of directors, Chen Zhangliang, believes that the prosperity of the spandex industry will continue for several years.

For the spandex industry after last year's big rise, Chen Zhangliang believes that although it seems to be lower than market expectations, the domestic spandex industry seems more rational. After the boom year of 2013, there have been no small-scale enterprises announced to expand production, and new production capacity has been concentrated in several large-scale enterprises. With rising costs, stable gross margins, and inflexible environmental protection policies, the spandex industry will present three trends: First, differentiation in product competition and avoid homogenous competition; second, centralization of competition in the main body to avoid disorderly competition; Third, the industry cycle is flattened to avoid strong fluctuations. “This is our judgment based on our 15 years of experience in the deep-spreading of the spandex industry.”

He further explained that he is still optimistic about the spandex market in 2014. Optimism does not mean that the spandex market can continue the momentum of price increases last year, but refers to the fact that the industry maintained overall stability and development in the high point of last year's boom.

From the perspective of subdivided products, it is expected that the demand for coarse denier will increase in the second half of the year. Therefore, the annual prosperity of spandex can still maintain a relatively high level. Some manufacturers in the market due to inventory and other reasons 40D prices have recently been slightly reduced, the company's product prices and the previous period. Chen Zhangliang stated that he is optimistic about the spandex market in the second half of this year. Due to the large demand for coarse denier yarns in the second half of the year, the price of 40D spandex products still has room to rise. At present, the selling price of the two types of products of the company is 40D which is about 5.2 million yuan, and 20D is about 63,000 yuan which "has been kept at full capacity."

As for the future development trend of the industry, Chen Zhangliang clearly believes that the economy will continue to keep up with the strengthening of environmental protection pressure. “We believe that the spandex industry in the next 2-3 years will still be in a rising period and there will be no overcapacity in the past few years. There are three reasons for this judgment: First, the spandex product differentiation will be different, and new capacity will be mainly targeted in the future. Differentiated products in specific markets are difficult to constitute the vicious competition of mutual infringement as in the past; the competition between the two main players is centralized and oligopolistic. After a periodical baptism, the new production capacity is more orderly and rational, and the current environmental protection requirements are higher and higher. The cost of environmental protection continues to rise, and it is difficult for ordinary small and medium-sized enterprises to bear the burden. In the future, the competition in the spandex industry will be concentrated in a few large companies. Third, the industry cycle will be weakened. With the expansion of spandex usage and application, demand is expected to maintain a more rigid growth. ."

When it comes to oligopoly in the industry, one immediately wonders whether the spandex industry will re-engrave the dye industry. Chen Zhangliang believes that the success of any company cannot be replicated, but there are indeed some successful experiences worth learning from. The current pattern of the dye industry is mainly caused by the environmental protection policy. Under such a policy background, enterprises that originally focused on environmental protection inputs have great strategic initiative and product profitability. The spandex industry is a high-energy-consuming industry. In the next few years, the tightening of environmental protection policies is inevitable and irreversible. Zhejiang is in the forefront of implementing the environmental protection policies, while most of the domestic spandex production is concentrated in Jiaxing, Xiaoshan, and Shaoxing. Therefore, the spandex enterprises in these places are facing greater environmental protection and cost pressures, which ultimately results in the loss of competitiveness of enterprises with insufficient financial strength, and the gradual elimination of some backward production capacity, contributing to the improvement of industry concentration. In this process, Huafeng Spandex will directly benefit from its advantages.

In addition, the company recently entered the new polyurethane curing track bed project. Chen Zhangliang stated that the polyurethane curing track bed is the third generation of the railway bed system. Currently, the domestic railway track bed is divided into flawless and flawless. This project combines the advantages of helium and ballastless tracks, not only greatly reducing the cost of maintenance and repair of the line, but also Higher security. This technology can be applied to the high-speed railway ballastless slab concrete subsidence, the highway concrete slab subsidence, the wrong platform; the subsidence of the bridge of the approach bridge; airport runway, taxiway, and soil curing; repair of residential concrete slabs.