Global metal packaging market showing signs of revival as aluminium premiums soften

The global metal packaging industry has shown some signs of revivals as aluminium premium and tinplate prices have softened, though the market has still not been fully out of doldrums. Matured metal packaging markets exhibited stable growths at low levels, while emerging markets benefited from swift shifts towards the high-growth plateau. However, some of these high growth markets remained more fragmented in terms of the competitive landscape which rendered producers less control on margins. For instance, almost all multinationals cans manufacturers in China are currently struggling to make profits due to numerous reasons including overcapacity and a peculiar cost-profit relationship in the market.

However, the overcapacity problem does not only exist in China but also in more matured markets such as North America. According to the industry experts, food and aluminium beverage cans are standardised products, and producers gain very little command over product differentiations in the mass containers market. In the backdrop of fierce competition, light metal packaging manufacturers have been making some advances to improve their margins through market consolidations, conversion of beverage cans production lines from tinplate to aluminium, new speciality cans, slim and sleek designs etc.

Meanwhile, substrate suppliers passing through more turbulent market conditions due to high inflow of Chinese materials, volatility in raw materials prices (e.g iron ore and metallurgical coal) etc. In the past, metal packaging manufacturers were buying substrates on a regional basis as well under long-term contracts. However, due to overcapacity in China and falling metal prices, some leading regional metal packaging manufacturers now outsource from China, and on a comparatively short-term basis. This has exacerbated the market conditions.

Drilling down further, food sector will continue to remain a major end-use sector for light metal packaging. However, demand for metals in volume terms are set to curb due to a number of reasons including falling containers’ weight.