North American BOPET market in for bumpy ride

supply and demandStrong demand for biaxially oriented polyethylene terephthalate (BOPET) in 2018 has resulted in tightening supplies in North America and globally, according to Rob Gilfillan, PCI Wood Mackenzie research analyst. Gilfillan spoke to attendees of the SPE Flexible Packaging Division conference on Oct. 29 in Phoenix.

The BOPET market represents a $12 billion industry annually. Demand is at just over 5 million tons this year, which is “relatively small” compared to PE and BOPP. Currently demand is rising higher than production, Gilfillan commented. “Mexico is the only country to be a net exporter of BOPET film in the North American region,” he added. “Canada has no domestic BOPET production.”

In Europe, capacity is outstripping demand and no capacity introductions have been announced for the next five years.

However, China has a “massive amount of PET coming into the market,” and even though there is a clear imbalance in Asia, with new lines installed, they’re not going to stop making a significant investment in PET, explained Gilfillan.

In the North American market there is demand for BOPET thick film for electrical and electronic end markets. The U.S. thin film market is seeing “much healthier demand—3.5% over the last five years,” said Gilfillan. UFlex, he noted, is the number one producer of thin film, where the dominant end use is packaging. Metallized film represents 48% of the thin-film market and achieved a 5.5% growth rate over the last five years. “Packaging and metalizing are driving growth in the North American market; it’s by far the biggest end use of BOPET film,” Gilfillan said.

Gilfillan noted that there is no domestic capacity on the market and current lines are “fully loaded.” End users can expect to see higher BOPET film prices—there is “no cheap offshore alternative,” he added. “Things could get bumpy next year, all leading to higher film prices.”

With regard to sustainability, Gilfillan said that the North American market will continue to shift from traditional packaging materials— glass, metals and rigid packaging—to flexible packaging. “A lot of flexible packaging is ending up in landfills or waste-to-energy plants,” noted Gilfillan.

BOPP film’s primary markets increased 12% in Q3 2018; however, U.S. demand is outstripping production and upward price pressures will continue through year’s end. Specialized films will remain an important sector in North America.

Food packaging represents 80% of regional BOPP film, with demand reaching 10 kT. BOPP is a mature market, however, and Gilfillan noted that trade wars could open up opportunities for U.S. producers.       

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