AA capacity expansion, industrial concentration extent downgrade and MDI constant increase of production, pricing power has transferred from upstream to downstream players. PU leather industry will enjoy more profit as a result of free of cost handicap.
AA industry lost its glamour
Before its new increased plants put into production, AA existing suppliers lowered quotation below cost level, hoping to prevent competitors’ new capacities from running into full load. Since that time market pricing power has transferred to buyer. AA market is predicted to maintained low cost and margin level as a result of large amount of capacity in line.
MDI market remain weak pressurized by new increase of capacities
In spite market concentration and pricing power superior to downstream PU leather, MMDI future capacities increase are more rapid than demand growth range. Worse still, European and American economy recession continue, MDI pricing power will be transferred to downstream PU leather.
Strengthened PU leather pricing power
As a result of industry concentration downstream and increase capacity, PU leather industry profitability will go up once restricted by high cost.
Spandex announced challenge to rebound
This year new increase capacities made spandex lose pricing power. Their profitability is under pressure and keeps at low level.
PU leather announced the largest flexibility
PU leather industry has more profit in the industry chain. Thanks to increase of profit, new plant in stream and rebound of downstream demand, long-term investment opportunity remains.
Bulk cargos increase, downstream demand weakened, macro economy worsened and new increase capacities lower than expectation could be the risk.