SE Asia biaxially-oriented PP margin squeezed on high feedstocks

25 January 2011 08:01  [Source: ICIS news]

SINGAPORE (ICIS)--Southeast Asia’s biaxially-oriented polypropylene (BOPP) film makers are facing thinning margins, as the product’s prices have not been rising in tandem with raw material costs in the past month, industry sources said on Tuesday.

“Our margins are being squeezed because it’s very difficult to pass on the additional raw material costs to our customers, particularly when resin prices have been increasing so sharply,” said a BOPP film maker based in southeast (SE) Asia.

BOPP resin prices had risen to $1,560/tonne (€1,139/tonne) CFR (cost & freight) SE Asia in the week ended 21 January, up by 4.3% from the same period a month earlier, ICIS data showed.

However, general BOPP film prices had been hovering at around $2,100–2,200/tonne FOB (free on board) Thailand/Indonesia, regional BOPP film makers said.

That translated to thin margins, as the cost of converting BOPP resin into film was estimated at $700–800/tonne in Thailand and Indonesia, said local BOPP film makers.

The global BOPP film-processing capacity was estimated at 8.4m tonnes last year, 60% of which is based in China. Southeast Asia accounts for about 6% of that capacity, according to industry estimates.

($1 = €0.73)

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By: Chow Bee Lin
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