Global aluminium can stock market moving East

Global demand for beverage cans will grow~3-4 per cent in 2016 and a similar growth trend is expected up until the end of this decade. This growth is being driven largely by increased consumption in emerging markets.

Together, the US and Canadian markets use approximately 94 billion aluminium cans per year, making North America the largest market for can stock in the world, according to UACJ. Around 60 per cent of that amount are cans for carbonated beverages, the consumption of which have been declining in recent years, thereby resulting in sluggish demand. The remaining 40 per cent are cans for beer, the demand for which remains strong. A recent study shows that 55 per cent of all beers are packaged in aluminium cans, which is up from 50 per cent five years ago. The 5 per cent growth came at the expense of the glass bottle, whose usage fell from 40 per cent to 35 per cent.

In order to respond to this intense demand, all American aluminium rolling mills combined produce of more than 1.9 million tonnes (Mt) of can stock each year, of which approximately 1.6 Mt are used in North America. Compared to the Japanese can stock market, the size of the American market is some four times larger. Despite falling demand, by the end of this decade the US and Canadian market will still be producing 1.47 Mt of aluminium cans, according to CRU. However, can making is expanding strongly in Mexico and this market will soon exceed 200,000 t/y.

The world’s largest aluminium can producer is Logan Aluminium Inc. based in USA, jointly operated by Tri-Arrows Aluminium Inc. (owned by Japanese UACJ) and Novelis, the world’s largest can stock manufacturer. Logan Aluminium is also one of most cost competitive can producers in the world.

The can stock and beverage can markets have been shifting to emerging markets in recent years. Parallel to that, the growing trend is also shifting from the production of can stock to production of auto body sheet (ABS), before all in the USA and European Union.

Can stock capacity will expand in China, South East Asia and Saudi Arabia by end of the decade. However, capacity will fall in the USA as rolling mills shift production from can stock into ABS. This is expected to move the can stock market from surplus to deficit in the region, while the conversion fees for can stock would start to rise by end of this decade. Thus can makers will face a much tighter domestic market and will need to look for alternative offshore suppliers in the medium term, with Chinese mills being most probable solution. However, even with more Chinese can stock on the market, it is likely that pricing in the can stock sector will rise as domestic rollers focus on automotive sheet.

US and Canadian shipments of aluminium rolled products to the consumer durables market increased by 4.8 per cent in 2015, to 224,000 tonnes, according to CRU. Between 2015 and 2019, demand is expected to increase at a 3.1 per cent CAGR, and will total 253,000t in 2019.