An analysis from the UK-based consultancy said that a U-turn in market dynamics and re-stocking by industry over the past 18 months has seen prices plummet by almost 50% - with further slight decreases not out of the question.
From a high of €3.80/kg in February 2010, PCI said levels of €2.20 to €2.35 were typical at present for12µ corona treated packaging grade BOPET film. Spot price have fallen as low as €1.50 to €1.80.
High demand, low supply, unhappy converters in 2010
“The important point about the recent spate of higher pricing was that it was purely market driven,” said PCI managing director Simon King.
He explained that the 2010 price hikes came about despite the fact that charges for principle BOPET raw materials PTA and MEG were relatively stable.
The trigger came towards the end of 2010 as buyers needed to restock and the recovery from the global recession began to kick in properly. The led to demand outstripping supply along with a dearth of new capacity, which pushed tariffs higher and made it attractive for some larger film producers to switch from commodity film production to higher-end outputs such as flat screen televisions.
He added: “As a result demand was high and supply was low, leading to high prices, high margins and seriously unhappy converters.”
2011 has seen a complete reversal as prices have dropped month on month.
From the supply side, new capacity has emerged in India and Egypt. European buyers have also found supply from outside their home region after finding they could not rely on local suppliers for material.
BOPET raw materials have also started to rise, which has had the effect of cutting into margins for film producers.
At the same time global demand has softened from non-food packaging markets– particularly following a ban in India outlawing BOPET film laminate in tobacco packaging. Photovoltaic (PV) cell production has now largely shifted to China while the UK has halved subsidies for domestic electric generation, which has curbed payback on these and dampened demand.
Packaging players have also built up stocks in a bid to insulate themselves from any price volatility, said King.
PCI said that prices were near bottoming out as BOPET manufacturing must remain attractive to the producers and it seems unlikely that there will be further significant falls.
“Prices are therefore near the bottom, but perhaps not quite there yet,” said its analysts. “What appears clear is that the commercial landscape is getting back to ‘normal’, and it has become a buyer’s market again.”