BOPET Price Drop to Slow down amid Downstream Replenishment
Preface: Since March, the price of BOPET has turned from rising to falling and the decline has deepened. As of April 15, the price of 12μ general BOPET in East China fell to the previous low levels. From April, more producers cut down the operating rate, and the supply growth slowed down. The supply surplus won’t be changed in the short run, but the imbalance between supply and demand was eased somewhat. In the coming period, the decline in BOPET price will slow down.
Price dropped to a new low
According to the statistics of SCI, the price of 12μ general BOPET fell from RMB 10,660/mt to RMB 9,510/mt in one month and a half, down RMB 1,150/mt or 10.79%. Prices of other producers also went down. By April 15, the price of 20μ above thick film was RMB 9,310-9,610/mt. The negotiation price of 6μ BOPET was RMB 14,000-14,500/mt. The offer for substrate, which is used for release film and protective film, was around RMB 11,500-11,800/mt. Offers for hot stamping film were about RMB 10,000-10,100/mt.
Factors for the continuous decline of BOPET prices: The primary reason was still the sluggish demand. According to SCI, the operating rate of the downstream aluminum plating industry was 30%-50%, and the operating rate of color printing packaging in South China was only 20%. In addition, in mid-March, the BOPET market experienced difficulties in delivery and increased transportation costs, so buyers and sellers were not enthusiastic about trading, which dragged down the BOPET market. Another reason was the continuous increase in market supply and enterprise inventories. Last, the feedstock price lacked upward strength, which cannot drive up the BOPET market.
Profit was constantly squeezed
According to SCI, the BOPET industry profit was less than RMB 400/mt by April 15, which was the low level since September 2017. The compression of the profit level of the BOPET industry cannot escape the weak demand. The feedstock price trended sideways at a high level, driven up by the crude oil price, but the price of BOPET dropped due to the demand and force majeure. Therefore, the profit moved toward the production cost line.
Order level rose for the first time in two months
According to the 14 sampled enterprises, the order level in late January was around 33 days. The new orders underperformed on the sluggish demand, so the order level continued to shrink. By April 13, the order level contracted to 7 days. On April 14, the order level rose to 10 days or so, in the wake of replenishment of users, which lent some support to the BOPET market.
Inventory pressure was eased on the operating adjustment
By April 5, the BOPET industry operating rate was 73.78%, down 4.94% Y-O-Y. Entering April, some producers shut down the units or lowered the operating rate due to the factors such as feedstock, inventory, accessory material, etc. The weekly operating rate was only 72.24%. The supply declined in line with the operating rate decrease, so the inventory pressure at producers may be eased somewhat.
Market price decline to slow down with imbalance between supply and demand easing
On the supply side, the BOPET industry operating rate may continue to drop in the coming period, which may alleviate the inventory pressure. On the demand side, some downstream users replenish stocks based on the rigid demand, so the order level may extend. The imbalance between supply and demand is expected to be eased somewhat in the short term. However, the newly added capacity kept being put into use. Besides, it will be the slack season for the demand in Q2. And the operating rate at downstream plants will be in the range of 20%-60%. The supply surplus won’t change substantially. Given the notable decline in feedstock prices, the profit is near the cost line, so the room for the further drop will be limited. Overall, SCI predicts that the decline in BOPET price will slow down in the coming period. The 12 μ BOPET price is estimated at RMB 9,000-9,500/mt in East China.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
