Tinplate Market Focused on China and Japan

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Back in February, we dipped back into one of the minor metals we cover on a more seldom basis by interviewing tinplate expert Rodrigo Vazquez. As founder and senior vice-president of Harbor Intelligence Tinplate Unit, Vazquez has a unique perspective on the tinplate market.

Recently, news of Japan’s Nippon Steel entering a 50/50 venture with China’s Wuhan Iron and Steel for $293 million, as reported by ITRI, crossed our radar. The move will boost Nippon’s tinplate capacity to two million tons; the company is forecasting that China’s demand will increase to between 3.28 and 3.70 million tons by 2015, compared to 2.32-3.0 million tons in 2009, according to the report. Also, AMM reported that Baosteel raised its tinplate prices for June delivery, based on higher costs and improving sales, especially in the export market.

Here’s what Vazquez had to say on this and other recent developments when I spoke with him last week.

MetalMiner: Are there any residual effects from the Japanese earthquake on Japanese tinplate producers?

Rodrigo Vazquez: JFE Steel in Chiba had a minor disruption in tinplate production for 2 weeks, but their inventories were OK enough not to set back any orders. The rest of the plants in Japan were not damaged. The other important thing is, up to now, there has been no radiation detected in the material. With tinplate being a major element in food packaging, that was a major concern.

MM: What is China’s current appetite for tinplate, and how does their demand look in the future?

RV: It will continue to grow. One of the things happening in China is they are substituting tinplate imports, and building a lot of capacity inside the country. Japan is the major exporter of tinplate around the world. This means Japan wants to keep a major role in tinplate. Now China is trying to create joint ventures [with] Japan to keep a piece of the market. China is adjusting to the trends of import substitution and local production. We have also seen similar joint ventures between POSCO and others [in the Asian market].

MM: What about Chinese production? What steps are they taking to increase the quality of their product?

RV: They’re trying to substitute across all raw materials. Producing tinplate is very technical, so tech-wise, being in a joint venture with Japan or other experienced tinplate producers is very positive for the Chinese; it opens the door to higher quality material. It’s a win-win situation for the both sides on the technology and quality issues: China wants to have better technology and experience, and Japan wants to tap into these markets.

MM: Any other trends in the tinplate market?

RV: One thing that needs to happen: further consolidation of Chinese tinplate mills. In the steel industry, there are still too many mills in China more than a thousand. Concentration has to happen for the producers to have a healthier industry. The big mills have shown a willingness to start that within the next two years, they will show a big effort toward consolidation.

MM: What are you seeing in tinplate price activity today compared to three months ago?

RV: Prices have been increasing lately, even though cold and hot rolled steel is showing weakness in US and Europe, but there is definitely a lag between HR and CR coil prices and tinplate. We will probably continue to see tinplate prices growing in the next few months.

–Taras Berezowsky

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