BOPET: Profitability Declined amid Escalated Imbalance
The supply increased in the BOPET market from 2018 to 2022, but the demand gradually turned weak. The market supply-demand pattern was changed to an unbalanced state. The BOPET industry profit turned negative from April 2022 and stayed negative for a long time.
Capacity: BOPET capacity growth rate stayed above 15 for a long term
According to SCI, China’s BOPET capacity gradually mounted up from 2018 to 2022. The capacity growth was slow from 2018 to 2019 due to supply surplus and unbalanced development. The new round of capacity expansion started in 2020 as the industry profit improved. However, some projects in 2022 were delayed on the back of narrowing profits. The growth rate of capacity is predicted to fall by 8.90% Y-O-Y in 2022.
As of October 2022, China’s total BOPET capacity reached 4,932.1kt/a. 10 production lines with a total capacity of 377kt/a were added. Most newly added units were concentrated in thin film products in 2022. Half of the new production lines possess a width of more than 10 meters, which was a major improvement in the width of the production line.
Order: Orders for general-purpose BOPET declined Y-O-Y
According to SCI, the order level at BOPET plants saw a notable decline from 2020 to 2021. The order level was more than 30 days and even exceeded 60 days sometimes in 2020, but it declined to 45 days and stayed at 25-30 days most of the time in 2021. The order level declined again in 2022, which was around 15 das most of the time. There were two reasons for the narrowing order level. First, the capacity of the enterprises was improved, so the spot supply is sufficient, and the delivery speed is accelerated. Second, demand decreased. Downstream users showed thin buying interest as the previous inventory could basically meet their needs.
Profit: Stayed negative for a longer time
According to SCI, the profitability of the BOPET industry mounted up and then contracted from 2018 to 2022. The profit improved from 2018 to 2019 due to the healthy supply and demand fundamentals. The overall profit rose from RMB 660/mt to RMB 7,580/mt in 2020, due to the mismatched supply and demand. Many newly added production lines were put into use from 2021 to 2022, while the demand declined gradually. The profit narrowed amid the contraction between supply and demand. The lowest profit touched RMB -650/mt.
In the future, 3,00kt/a new capacity is expected to be put into use, so the supply may continue to increase. As for demand, the demand may recover with the economy improving, but the demand growth may be far behind the supply growth. The imbalance between supply and demand may aggravate continuously. Taking 12μ printing film as an example, as the production profit was already negative, producers may not further lower the price. Producers may face more difficulties in operation, and the BOPET price may follow the movement of cost.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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