Reasons Behind Current BOPET Price RiseForewords
Price is the final result of continuous negotiation between buyers and sellers, and it is the embodiment of commodity value. During the negotiation process, buyers and sellers will refer to the supply, demand, cost changes, macro environment and other factors in the commodity market, and changes in the mentality of buyers and sellers will also affect the price. This article briefly analyzes the logic of the recent BOPET price increase.
BOPET prices went up in March
Entering March, offers for 12μ BOPET in East China rose to RMB 11,010-11,510/mt, and the mainstream dealing prices only rose by RMB 300/mt to RMB 10,300-10,800/mt. Recently, the increase in dealing prices was smaller than that of offers, as the orders did not move up timely.
As of March 8, offers for general-purpose 12μ BOPET in East China were RMB 11,010-11,510/mt, and the negotiation price was about RMB 10,310-10,810/mt, down RMB 100/mt from the previous trading day, up RMB 250/mt from last month, and down RMB 1,700/mt from last year. Offers for 12μ spot resources in the retail market were about RMB 10,800-11,300/mt. Offers for 20μ and above general-purpose thick film were about RMB 10,000-10,500/mt. The negotiation price of 6μ BOPET in North China was around RMB 14,500-14,800/mt. The offer for substrate, which is used for release film and protective film, was around RMB 12,000/mt. Offers for hot stamping film were about RMB 11,300-11,500/mt.
Feedstock price extended gains, lending increasing support
In March, the macro environment was turbulent, and crude oil prices rose by $10/bbl in a single day. Rapidly rising crude oil costs continued to drive up the prices of downstream products.
BOPET and Upstream Price Change
Due to different processes, BOPET’s main feedstock is PET chip and PTA. In March, the price of PTA and MEG saw an increase of 15% or so. Though the demand for PET chip was weak, the price of PET chip also went up by 7% or so, supported by the cost increase and the inventory decrease. The production cost rose from RMB 6,490/mt to RMB 7,405/mt, up 14.10% Y-O-Y. The increase in cost lent notable support to the BOPET price.
BOPET price increase was not as high as feedstock price growth, compressing the profit
Though BOPET price went up in March, the overall increase was no more than 5%, while the price of PET chip rose by 7%. The overall production rose by 15% or so, squeezing the profit from BOPET production.
In late February, the profit from general 12μ BOPET was around RMB 1,800/mt. In early March, the profit narrowed to RMB 1,500/mt. By March 8, the profit fell to RMB 1,000/mt or so.
Order delivery period shortened
According to the 14 general BOPET sample enterprises, the average order level was at 17.5 days’ worth on March 8, down 3.21 days from late February, and down 13.93 days from that before the Spring Festival holiday.
Overall, the recent BOPET price increase is driven by the cost. Besides, the existing orders and shrinking profits also lent support. However, the current sluggish demand and ample supply restrict the increment. In the coming period, the sluggish demand and ample supply will be the bearish factors for the market. If the crude oil price continues to rise, the price of BOPET’s feedstock will follow the uptrend. Underpinned by the cost, producers may continue to lift the offers. By then, the market will be stalemated as buyers will show resistance.
Price is the final result of continuous negotiation between buyers and sellers, and it is the embodiment of commodity value. During the negotiation process, buyers and sellers will refer to the supply, demand, cost changes, macro environment and other factors in the commodity market, and changes in the mentality of buyers and sellers will also affect the price. This article briefly analyzes the logic of the recent BOPET price increase.
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