Great Southeast BOPET domestic production capacity shows obvious cyclicality

Recently, the Great Southeast released a transcript of investor relations activities. When asked about the BOPET domestic production capacity and expansion plans, the company said that from 2000-2023, China's BOPET production capacity’s compound growth rate was 21%. Although China's BOPET production has been growing at a high rate for more than 20 years, its growth rate has not been stable. It has shown a clear cyclicality. 

As a result of the cyclical nature of BOPET production capacity growth, its market supply and demand and the gross margins of its producers also show clear irregularities and cyclicality.

From 2019 onwards, China has once again launched a new round of capacity expansion. To date, the newly signed production lines has reached around 3.5 million tonnes. The new production lines for this round of expansion have now started to increase. The total BOPET capacity in China is expected to reach around 7.4 million tonnes by the end of 2023, doubling the 3.46 million tonnes capacity in 2019.

(Highlights of the Great Southeast booth at Shenzhen International Film & Tape Exhibition 2021)

The Great Southeast said that the start-up rate in the BOPET industry is calculated according to the capacity factor (actual output/designed capacity). Here, the design capacity is the maximum capacity specified in the production line contract, and the actual production is usually about 75% of the contracted design capacity, depending on different varieties and thicknesses and the operating hours of the machine throughout the year. 

When the market is bad, the industry's start-up rate is generally at around 60%. At present, the start-up rate of domestic manufacturers is generally maintained at around 70-75%. Lastly, the company's start-up rate is generally maintained at around 75%.