Sluggish Demand to Drag down BOPET Market
In June, BOPET prices inched down after increases. In the coming period, the maintenance will gradually increase, but the downstream demand may not see obvious improvement. Where will the market go amid the tug of war between supply and demand?
Price inched down after the increase
In early June, prices of 12μ BOPET in East China rose first and then went down. The price rose from RMB 9,560/mt to RMB 10,010/mt, up RMB 450/mt or 4.71%. Later, the sluggish demand dragged down the price to RMB 9,910/mt.
As of June 15, offers for general-purpose 12μ BOPET in East China were RMB 10,310-11,010/mt, and the negotiation price was about RMB 9,810-10,010/mt, unchanged from the previous day, up RMB 250/mt from last month, and down RMB 400/mt from last year. Offers for 20μ and above general-purpose thick film were about RMB 9,610-9,910/mt. The negotiation price of 6μ BOPET in North China was around RMB 13,000-14,000/mt. The offer for substrate, which is used for release film and protective film, was around RMB 11,500/mt. Offers for hot stamping film were about RMB 10,300-10,500/mt.
Profit loss extended
In June, the profit of the BOPET industry turned into losses, and the highest loss reached RMB 500/mt. The losses were mainly attributed to the rising feedstock prices. To ensure the normal processing cost, BOPET producers lifted the price accordingly. The co-movement between BOPET prices and the feedstock prices was enhanced.
Feedstock price drove up BOPET price
In June, the correlation between BOPET and its feedstock markets reached the highest of the year. Prices of PTA rose from RMB 6,800/mt to the annual high of RMB 7,750/mt. Prices of PET chip rose by RMB 600/mt to RMB 8,500/mt. Driven by the cost, prices of BOPET mounted up.
Limited order increased curtailed BOPET price increase
The willingness of buyers to replenish improved in early June due to the negative profit and the rising feedstock price. However, the downstream demand did not see an obvious improvement. Transactions at high prices were reduced then, curtailing the increase in BOPET prices. With the order level shrinking, the market prices of BOPET inched down.
Due to the losses and the continued growth of feedstock inventory, downstream users’ attitudes turned from bearish to bullish. In addition, after the digestion of previous resources, some companies have replenishment expectations. Many plants stocked up, so the order level at producers extended. According to the 14 sampled enterprises, the overall order level was around 13.29 days.
Sluggish demand to drag down BOPET price
Recently, the crude oil price is soft. Prices of PTA and PET chip may fall back amid insufficient cost support. Thus, the support to the BOPET market from the cost side will weaken. More production lines will be shut down for maintenance, with a total related capacity of 330kt/a. The maintenance is expected to last for 25-30 days, and the estimated output loss is 20kt or so. June is the slow season for downstream demand. The operating rate at downstream plants is about 30%-50%. In the context that the previous stocks have not been consumed and there is no obvious improvement in downstream demand, transactions at high prices seem hard to pick up. As time goes by, the order level at plants will shrink. Overall, the sluggish demand is expected to weigh down the BOPET price in the short run, but the decline is anticipated to be limited.
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