BOPP packaging film development in the first half of 2011

Looking back at the development of packaging film in the first half of 2011, the market already revealed a puzzling sluggishness this year. Businesses moved through constant expectation and disappointment. The reason seems to be that negative factors were everywhere in the market - from macroeconomic regulation, to capacity expansion, and then to weakening demand - leaving one wound after another. As for the development of BOPP (Biaxially Oriented Polypropylene), that is, biaxially oriented polypropylene film, the rapid expansion of BOPP packaging film capacity has pushed the market into a downward channel.

According to statistics from Boye Information, China's total BOPP capacity was 3 million tonnes in 2010, up 13.5% year on year; total output was about 2.55 million tonnes, up 14.8% year on year. It is expected that by the end of 2011, another 150,000 tonnes or so of new BOPP capacity will be released to the market. Overall, between 2010 and 2012, BOPP capacity was in a period of rapid expansion. However, looking back at the BOPP market trend in the first half of 2011, January to April still followed the trend of the second half of 2010; yet although prices moved upward, the rise was extremely difficult. In May and June, once the positive factors were exhausted, negative factors arrived and the market entered a downward channel.

Factors affecting the trend of BOPP packaging film: first, crude oil. The biggest influence on the crude oil market this year was geopolitics. The outbreak of the war in Libya sent oil prices soaring, and by the peak in mid-April, Brent was already close to $130; however, as the war factor faded, oil prices began a rational return.

Second, the macroeconomy. In the first half of the year, inflationary pressure in emerging economies kept increasing, and China's central bank raised the reserve requirement ratio six times to manage inflation expectations. Yet the tight monetary policy was clearly not very effective in curbing inflation; instead, its suppressive effect on the economy was obvious, and the momentum of economic growth was weakening. In addition, the economic situation in Europe is complicated, and the scope of the European debt crisis keeps expanding. Although the United States has maintained a relatively good recovery momentum since the start of the year, unfavorable factors for economic growth are also increasing at present; growth in consumer spending, government spending and business investment has already slowed and will continue to drag on economic growth.

Third, the supply-demand relationship. In the first half of this year, no large amount of new capacity was put into the market on the BOPP supply side; on the contrary, before May, power rationing had a certain impact on the supply side, and manufacturers in East China operated at insufficient capacity. Weak demand precisely offset the reduction in supply, and the market supply-demand side was in a mildly balanced state. In addition, the state's strict control over food safety is also an important factor. With the "plasticizer" incident, the rectification of the food industry directly affected demand for packaging.

This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-376339.html. All rights belong to the original author; this article is for industry exchange and learning only.