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Supply/demand disruption and rise in upstream prices elevates the European BOPP Film market
Supply/demand disruption and rise in upstream prices elevates the European BOPP Film market

Supply/demand disruption and rise in upstream prices elevates the European BOPP Film market

  • 23-Feb-2024 3:02 PM
  • Journalist: Patricia Jose Perez

The price of BOPP film in the European market has been on a continuous increasing pattern, influenced by several factors affecting the final price. With the week ending on 23rd Feb, the price of BOPP Film in Germany surged to USD 2710/ton FD Hamburg. One significant factor for increasing price trend of BOPP Film contributes by rise in feedstock Polypropylene prices, which increased by 3.5% during the week. Additionally, upstream Propylene rose by 2% this week due to supply disruptions arising from the Red Sea crisis. The ongoing crisis has resulted in delayed arrivals of import cargoes from the Middle East and Asia, directly impacting the availability of PP in the European market.

Despite stable demand for Polypropylene in the country, the scarcity of the product has driven the market. Goods from Asia to Europe typically pass through the Suez Canal, the shortest passage, but the ongoing Red Sea crisis has disrupted this route. Supply disruptions resulting from the crisis have led to delayed arrival of import cargoes from the Middle East and Asia, affecting the overall supply chain and exerting upward pressure on input prices in the European market. Given Europe's reliance on imports of PP, particularly from the Middle East and Asia, the continuity of the crisis poses a threat to the then-current supply status.

The demand for BOPP Film from the downstream packaging sectors remained stagnant in the European market due to general reluctance among customers amid economic uncertainty and tight financial conditions. Additionally, new export orders for BOPP Film decreased as the global supply chain industry faced turbulence due to threats on the key Middle Eastern trade route. This has led to longer shipping times, additional surcharges, and surging freight costs, further impacting the demand for BOPP Film in the European market.

The German economy has faced ongoing challenges in February 2024, with the manufacturing sector notably struggling, consequently impacting overall economic performance. Germany is experiencing a shortage of new orders, both domestically and internationally. This has resulted in a subdued demand for BOPP Film, despite the sustained increase in prices.

According to the Chemical commodity team of ChemAnalyst, the price of BOPP film is likely to increase in the upcoming weeks. The short supply situation faced by feedstock PP, caused by delayed cargo arrivals from the Middle East and Asia as a result of the Red Sea crisis, has prompted buyers to procure material from domestic sources. This trend has resulted in spot prices trending higher. The current situation is exerting pressure on the BOPP Film market, potentially leading to an increase in prices.

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