Will BOPET Market Pick up amid More Unit Shutdowns
After the BOPET moved down, downstream users replenished stocks based on the rigid demand. With more production lines being shut down, the output was reduced. The contradiction between supply and demand was eased somewhat, supporting the price to some extent. However, the downstream demand was still weak. Amid the expectation of unit restart and new capacity release as well as the weak cost support, it is predicted that the BOPET market will remain soft in the short run.
BOPET price continued to slide
Entering May, the BOPET price continued to move down. Taking the 12μ BOPET in East China as an example, the price dropped to RMB 8,160/mt. The current price has fallen below the five-year low in history, mainly due to the oversupply in the market. Recently, the BOPET price was still on the downtrend, because of the lower feedstock prices and tepid downstream demand. As of May 12, the negotiation price of the general 12μ BOPET in East China was RMB 8,010-8,310/mt, stable from the previous trading day, down RMB 350/mt from last month and down RMB 1,500/mt from last year.
Low order level weighed on BOPET prices
According to the 14 sampled enterprises, the order level was compressed to 6.85 days in the first week of May, which was an annual low. In Q2, it will be the slack season for the soft packaging industry. Sales volume will present a decline of 20%-40% compared to the previous year, so the procurement volume of BOPET will also decrease. Producers may lower the price to attract orders. Given the negative production profit and more production lines in shutdown, the further decline in prices may be limited.
Feedstock price extended losses, weighing on the market
Around May, the feedstock prices fell from highs. Therein, the PTA prices dropped more than 11%. The production cost decreased from RMB 6,847/mt to RMB 6,283/mt, down RMB 591/mt or 8.60%. Following the downtrend in the feedstock market, BOPET prices also declined.
Profit gradually recovered
As the price decline in the BOPET market was not as large as that in the feedstock market, the production profit in the BOPET market gradually recovered. As of May 11, the profit was RMB -400/mt, up RMB 500/mt from that in early April. With the profit improving, the bottom support to the BOPET price softened.
The industry operating rate moved down
Starting in April, producers actively lowered the operating rate or shut down the unit because of production losses. The overall industry operating rate saw a notable decline. During the May Day holiday, more production lines were shut down. As of the second week of May, the operating rate of the BOPET industry declined to 64.26%, down 5% from that in early April. The output was reduced in the short run, which alleviated the supply pressure and bolstered the prices.
BOPET price may be soft with consistent imbalanced supply and demand
2-3 lines are expected to restart recently. 3 new production lines will be put into use. The total supply is expected to climb. As for demand, the order level extends limitedly. It is the slow season for the soft packaging industry in Q2, presenting slow consumption and thin buying interest. Although downtime of units and limited order increments can relieve the supply pressure in the short term, they cannot change the current situation of oversupply in the market, and there is still downward pressure on market prices. In the long run, the BOPET market may remain soft.
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