An interesting report by Philip Rogers of Metals for Packaging, UK, and author “Tinmills of the World,” was distributed by Platts SBB Insight in their Issue 179 last week.
The report deserves review for its comprehensive coverage of the market, and although tinplate is a small part of the steel industry, it remains a significant user of HRC and tin, and a valuable source of revenue for the mills still in this sector.
Those mills now number some 70 plants around the world, according to Mr. Rogers, accounting for about 6 percent by value and 1 percent by volume of overall steel sales.
Global tinplate production, he informs us, is around 16 million metric tons per year against installed capacity some 23 million tons, meaning the average mill capacity utilization is about 70%, roughly comparable with general steel production – but of course significant global variations exist.
Generally speaking, North America, Europe and Australia have undergone capacity reductions over the last 10 years, losing some 2.4 million tons through plant closures. Iran, India, Southeast Asia and China have, on the other hand, added capacity, with China alone adding 4.3 million tons since 2006 and with at least another 1.2 million tons due to be bought on stream this year.
All that capacity, however, is not being used efficiently; the report estimates capacity utilization in China could be only 55% and falling.
The trend of falling production in mature Western markets has been summarized by Mr. Rogers as down to four principal causes.
Firstly, the decline in local demand for cans, as consumers have switched to newer packaging concepts. The second is light-weighting of cans, observing that a typical three-piece can has dropped in weight by about 20 percent in the last fifteen years.
The other reasons and necessary price curves for future profitability? We conclude in Part Two.