Will BOPET Price Continue to Rebound?
Preface: More than half of 2022 has passed, and the BOPET market has been in a downtrend most of the time. The current market price stabilized. What are the reasons behind it? How will the market adjust in the future?
BOPET price stabilized after declines
BOPET is the only film that is classified according to its application, and there are many product types and specifications. According to the proportion of products in the market, 12μ printing film accounts for up to 30%, followed by general thick films above 20μ, then release film and protective film, and finally 6μ printing film and hot stamping film. Taking 12μ film as an example, its price rose first and then dropped in H1. The high price was RMB 10,610/mt, while the low price was RMB 8,310/mt. The main reason for the decline in prices was that the imbalance between supply and demand was exacerbated. As the industry profit turned negative, the price stopped falling.
As of September 13, the negotiation prices for general-purpose 12μ BOPET in East China were RMB 8,510-8,710/mt, up RMB 100/mt from the previous standing day, up RMB 50/mt from last month and down RMB 2,050/mt from last year. Offers for 20μ-75μ general-purpose thick film were about RMB 8,410-8,610/mt. The negotiation price of 6μ BOPET in North China was around RMB 10,500-10,800/mt. The offer for substrate, which is used for release film and protective film, was around RMB 10,000/mt. Offers for hot stamping film were about RMB 8,800-9,000/mt.
Negative profit lent bottom support
In 2022, the profits of various products in the BOPET market were significantly compressed, and some products entered an era of negative profits. Taking 12μ printing film as an example, it has basically been in a negative profit state since June, and the negative value has gradually expanded. The largest loss was RMB -620/mt, down RMB 2,451/mt from the highest level of RMB 1,834/mt in the year. This was also the period with the longest negative profit and the largest loss in five years. In order to maintain normal processing costs, producers have no further room to retreat, and the market price of BOPET began to stabilize.
Slightly eased imbalance supported the BOPET price to stabilize
As for supply, the output of BOPET totaled 2,789.3 from January to September, up 452.4kt Y-O-Y. As for demand, to average order level from January to September was 13.67 days, down 13.36 days Y-O-Y. In 2022, the overall contradiction between supply and demand increased, so market prices fell, and profits turned negative. However, for the period from July to September 2022, some of the new capacity commissioning plans have been delayed and the maintenance of units increased, so the output dropped significantly compared with H1. Though the order level was still at a low level compared with last year, it was gradually improving, registering demand recovery. On the whole, the imbalance between supply and demand in the BOPET market from July to September has eased slightly compared with H1, supporting prices to stop falling and rebound.
SCI holds that the BOPET market may go up in the coming period, but the price increment may be influenced by the following factors.
Cost: Cost is the primary driving factor for this round of BOPET price to stop falling and rebound. Players need to pay attention to the changes in the feedstock market.
Fundamentals: Th current BOPET industry operating rate was at a low level as many production lines are shut down for maintenance. The operating rate at downstream plants is in the range of 40%-60%, increasing from the previous stages. Overall, the imbalance between supply and demand still exists but does not enlarge.
Market sentiment: The current BOPET price is at a five-year historical low. Under the influence of the theoretical demand peak season in the second half of the year, the market has always expected a price rebound.
On the whole, BOPET has a high probability that the BOPET price will stop declining and rebounding slightly in the short run. The bullish factors are the cost support and the increasing orders. However, in the medium and long term, how much BOPET prices will rebound and whether they can maintain a high level in the future are uncertain. Players still need to pay close attention to the demand release and feedstock market changes.
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