BOPP Film Prices Increase in the US Market Amidst Increased Production Costs

The prices of Biaxially Oriented Polypropylene Film (BOPP) have seen a nearly 2% increase in the US market. This rise can be attributed to the higher prices of its raw material, Polypropylene, which itself experienced a 1.5% increase in the first half of October. Interestingly, this price surge occurred despite a 5% decline in Crude Oil prices.

Demand from the downstream packaging sector was constant as production costs continued to climb. Furthermore, international demand from key importers such as Mexico and Brazil was strong, where prices of BOPP Film have also increased by approximately 2% and 6%, respectively, throughout the first half of October. With production costs and factory gate charges increasing, a constant demand from the downstream packaging sector was bolstered by the increment in costs. With interest and current inflation rates standing at more than 4% due to continued increments, purchasing activities were primarily moderate, with restrictions only as per requirements.

Key market players such as Cosmo Films have also been reported to take added advantage of the incoming festive season by deliberately creating a shortage in the supply of the product to regulate prices of BOPP Film to prevent an oversupplied market amidst the weak economic conditions, even though moderate improvements were recorded in September, with a backlog of orders continuing to shrink and PPI further increasing by almost 0.5% according to US Bureau of Labor Statistics. Demand for BOPP Film was equally strong from the key importing countries such as Mexico and Brazil. Production costs across the US increased interest rates as the Federal Bank failed to limit inflation rates in the target corridor of approximately 2%.

In Mexico, demand strengthened as the overall economy showed signs of revival, with inflation rates declining since July 2023, from over 7% to currently standing at 4.45% in August, with depreciations expected in September and October. This led to increased purchasing from downstream FMCG industries, which continued to pressure the packaging industry and strengthened the demand for BOPP Film.

Overall prices of BOPP Film are expected to increase throughout October as the festive quarter of 2023 approaches, which is expected to strengthen the demand for BOPP Film from the downstream packaging industry. Moreover, the production costs of BOPP Film are not likely to depreciate as the Federal Bank's continued hikes in interest rates are mostly likely to increase input costs and factory gate charges. Moreover, amid the moderate economic improvements, suppliers are expected to check BOPP Film's inventory circulation to prevent an oversupplied market.