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Sanctions Relief for Venezuelan Crude Oil Dampens BOPP Film Prices in the European Market
Sanctions Relief for Venezuelan Crude Oil Dampens BOPP Film Prices in the European Market

Sanctions Relief for Venezuelan Crude Oil Dampens BOPP Film Prices in the European Market

  • 06-Nov-2023 1:35 PM
  • Journalist: Rene Swann

Prices of Biaxially Oriented Polypropylene (BOPP Film) in the European market have depreciated by an average of almost 3.4% owing to the bearish situation of feedstock Polypropylene, whose prices also depreciated by more than 3% in the first week of November. This was largely due to easing production costs as prices of upstream Crude Oil overall exhibited a depreciation of more than 4%.

Despite the healthy demand for BOPP Film from the automotive industry across Europe, depreciating production costs far overwhelmed the current demand for BOPP Films. The prime reason for the depreciation in the prices of Crude Oil is largely due to the ease of sanctions upon imports of Crude Oil from Venezuela, which consequently led to an oversupplied market as Venezuelan Crude Oil gets authorization for production, sale, and exports. This consequently led to the devaluation of Crude Oil and eased production costs of BOPP Film, which consequently led to the depreciation of prices.

Across Germany, demand for BOPP Film from the electric automotive sector was recorded to be healthy as shortages of semiconductors eased and wait time for automotive industries reduced. The performance of the downstream automotive industry was relatively healthy, with major automotive sectors recording increments in revenues and upticks in profit in the third quarter of 2023. Major automotive players such as Volkswagen Group, BMW Group, and Audi recorded increments in profits of approximately 30%, 10%, and 15%, respectively, in the third quarter of 2023. Demand for BOPP Film from the downstream packaging sector of the FMCG industries was also constant, with the expectation of increments towards the end of November as Thanksgiving Day approaches. Furthermore, inflation rates are also expected to depreciate in Germany in October, with the inflation rate being 3.4%, according to Statistics Bundesamt.

Across the United Kingdom, the electric automotive sector also performed well due to an ease in the supply of semiconductors. This consequently increased the demand for BOPP Film in the automotive manufacturing sector. As the supply of semiconductors eased, production of electric vehicles increased. Records from the major players in the automotive industry indicated that automotive production doubled in October. Furthermore, sales in the automotive industries also took an upturn, with key market players such as Jaguar Land Rover Group recording sales of automobiles of more than 35% throughout the third quarter of 2023.

Finally, prices of BOPP Films are expected to increase as demand for LNG increases across Europe increases for heating purposes. The upcoming Thanksgiving Day is also expected to pressure the downstream packaging sector, which is expected to increase the prices of BOPP Films further. The market situation of BOPP Films largely depends on the market situation of Crude Oil, as inexpensive imports of Crude Oil from Venezuela are expected to depreciate production costs.

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