BOPET Market May Present Inverted V-Shaped Trend in H2, 2024
Introduction: The BOPET market first rose and then fell in H1, 2024. The market was under pressure due to the long-term strong supply and weak demand, but the short-term ease of supply-demand contradiction triggered an increase in the BOPET price. The demand is anticipated to improve in H2, 2024, particularly in the third quarter when seasonal demand is released. It is anticipated that the feedstock markets will rise in the meantime. Although the BOPET market may present a recovery in the third quarter, there isn’t much room to rise overall given the ongoing increase in supply pressure.
The BOPET market first rose and then fell in H1, 2024. Taking the 12μ printing film in East China as an example, its trend is consistent with SCI’s prediction in the 2023-2024 China BOPET Market Annual Report. In the first quarter, prices increased due to the easing of supply and demand contradictions and the support of costs. However, after the increase, transactions weakened. In the second quarter, prices fell due to intensified oversupply. From January to June 2024, the average price of 12μ printing film in East China was RMB 7,919/mt, a decrease of 1.52% from the average price in 2023. As of June 21, the price of 12μ printing film in East China has closed at RMB 7,760-8,010/mt, an increase of RMB 175/mt from the beginning of the year and a decrease of 2.77% from the high point of the year.
The low point of 12μ printing film in H1, 2024 was RMB 7,710/mt in early January, and the high point was RMB 8,110/mt in early April. As of June 21, the price of hot stamping film was RMB 8,000-8,400/mt and the price of release base film was RMB 9,000-9,300/mt. The price of metalized base film (6μ) was RMB 8,900-9,100/mt (EWX price with simple packaging and tax included) in Shandong. The price of back sheet base film was RMB 9,300-9,800/mt (delivered price with tax included) in Jiangsu.
Chart 1 2023-2024 China 12μ Printing Film Price
Chart 2 2024 China BOPET Prices
The BOPET market was overall at a five-year low, mainly due to oversupply. The gradual rebound in prices in the first quarter was mainly due to the slight easing of short-term supply-demand contradictions and cost support. However, in the second quarter, prices fluctuated downward due to intensified oversupply, but the decline was limited on the back of cost support.
The BOPET market was in a long-term oversupply as supply increased but demand recovery was slow
New BOPET capacity came online constantly. From January to June 2024, 13 new production lines were added, involving 5 enterprises (one new entrant) in Jiangsu, Anhui, Shandong and Shaoxing. As of late June 2024, China’s total BOPET capacity reached 6,500.6kt/a, up 410kt/a or 6.73% from late 2023. As for output, with the capacity expansion, the total output in H1, 2024 was estimated at 2,172.8kt, up 226kt Y-O-Y. The industry operating rate was 63.29% in H1, 2024, down 5.34% Y-O-Y. 2024 saw a continuation of the 2023 oversupply, which weighed on the prices. It was noteworthy that the operating rate significantly decreased in the first quarter and that new capacity was brought online heavily between March and June. The supply pressure was eased in the short term, which supported the BOPET market in the first quarter.
Chart 3 2024 BOPET Industry Operating Rate
Chart 4 2022-2024 BOPET Order level at Sample Enterprises
On the demand front, the overall downstream demand underperformed in 2024. According to the order at 14 sample enterprises, the number of undelivered orders at the end of each month in the first half of the year was around 10 days’ worth, except for an increase in advanced orders for the Spring Festival in January. In the first quarter, due to a decline in supply, the number of undelivered orders was higher than last year, which supported the market. However, in the second quarter, as production lines restarted, new capacity was released, and demand weakened, the number of undelivered orders was compressed, which weakened the support for the market. In addition, the coating industry has maintained a long-term operating rate of 30-50%, resulting in poor demand for release base film. The proportion of double-glazed modules in the photovoltaic industry has increased to 70-80%, leading to a decrease in demand for back sheet film. The overall demand does not provide significant support to the BOPET market.
Feedstock average price showed Y-O-Y rises, backing up the BOPET market from the cost side
The main feedstock of BOPET was PET chip and PTA. In 2024, the prices of PTA and PET chip both increased to varying degrees, driven by costs. WTI crude oil futures increased by 4.7% in H1, 2024, and Brent crude oil futures increased by 3.7%. Prices of PTA and PET chip increased by 1.61% and 1.80% respectively. However, BOPET prices fell by 1.52%. The cost increased, but the price of BOPET fell, which kept enlarging the production losses. Some producers were forced to lift the price.
In terms of gross profit, the gross profit has been compressed due to the continuous expansion of supply pressure. Throughout the first half of 2024, the gross profit of BOPET remained negative and remained at a low level for a long time, with an average of RMB-853/mt, a decrease of RMB 327/mt compared to the same period last year. As of June 21, the gross profit was RMB -894/mt, an increase of around RMB 100/mt from the beginning of the year, an increase of RMB 202/mt compared to the lowest gross profit value in late January of the year, and a decrease of RMB 235/mt compared to the highest gross profit value in early May of the year. The negative gross profit provided significant support for the bottom price of the BOPET market.
Chart 5 2023-2024 China BOPET Gross Profit
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
