BOPET market bottoms out

Flexible packaging materials consultancy PCI Films Consulting has claimed there will be no further significant fall in price for BOPET films, as the commercial landscape stabilizes after high demand and low supply at the end of 2010 forced prices up.
 
In an assessment of the market, Simon King, managing director at PCI Films Consulting, said during much of 2010 the principal raw materials used to make BOPET films, PTA and MEG, were relatively price stable so there was little need to raise film prices to recover higher input prices. However, towards the end of 2010, many buyers needed to restock and there was further recovery from the global recession.
 
King said this led to buoyant demand in the marketplace, so much so that suppliers found it difficult to meet requirements. There was no new production capacity being installed in the world and film prices were such that it was attractive for some larger BOPET film producers to switch some of their capacity from producing commodity films into higher added value areas such as flat screen TV and computer monitor production and photovoltaic cells.
 
‘As a result demand was high and supply was low, leading to high prices, high margins and seriously unhappy converters,’ King said.
 
‘Since then, the landscape has changed out of all recognition. On the supply side, new capacity has come on stream in India and Egypt and, because the major European producers weren’t able to provide sufficient supplies in 2010, European buyers have developed relationships with other producers from outside the region. Raw materials used in BOPET film manufacture have also begun to rise, which has reduced film producer margins.
 
‘On the demand side the global market has weakened: there is new legislation in India, driven by health and environmental issues, outlawing the massively popular BOPET film laminate for chewing tobacco and as a result there has been a significant fall in Indian BOPET film demand. Global PV cell manufacturing has now largely moved to China and in the UK, government subsidies have been halved for domestic electricity generation, slashing the potential payback for PV cells. Packaging film customers are also now well stocked against further price movements.’
 
PCI Films Consulting analysts believe that manufacturing BOPET packaging film has to remain attractive to the producers, with King saying: ‘It seems unlikely that there will be further significant falls in price. Prices are therefore near the bottom, but perhaps not quite there yet.
 
‘What appears clear is that the commercial landscape is getting back to “normal”, and it has become a buyer’s market again.’