The third cause of falling tinplate production in mature Western markets is the rapid rise in the cost of all the raw materials that go into tinplate since about 2007, which has made higher-cost Western products less attractive for exports, compared to newly installed local production in emerging markets.
The fourth trend evident over recent years in Europe has been the move from three-piece steel to aluminum beverage cans, a process that was preceded in the US where beverage cans have not been made from steel for 20 years.
As a result, in Europe seven lines using tinplate for beverage cans have been converted to aluminum in recent years with the loss of over 70,000 tons per year of demand.
Globally, demand for metal cans made with tinplate are predicted to grow from 2010-2104 in all areas except the US, according to Mr. Rogers, with most of the growth in China, India and other parts of Asia. Nevertheless tinplate mills will remain under pressure to achieve profitability.
Since 2009, the report informs us the difference between HRC prices and tinplate in mature markets has been in the region of $600-800/metric ton, with the last three years in the US achieving more like $1,250-1,500/metric ton.
But even though this sounds substantial, technology and quality issues have significant cost implications when making tinplate. For example, the superior quality of HRC required at the front end incurs a $50-70/metric ton premium over commodity coil.
Recent submissions in trade cases suggest a premium of at least $900/metric ton is required for breakeven. No surprise, then, that the industry is sensitive to imports from subsidized or lower-cost sources, undermining the viability of locally produced tinplate.
As with so many metals, the massive installed capacity in China and India is a worry to Western producers, particularly when utilization rates are so low that the incentive to export must be high.