Tin platers struggle as metal prices hit record highs

Factiva: "The producer confirmed that tinplate manufacturers are safeguarding themselves against volatile tin prices for 2011. 'When you get into pricing for next year, it will be built in. It's too significant to absorb all the time,' he said, noting that while talks with consumers have started for next year, no deals have been finalized.

Building tin prices into contracts for tinplate might be a new approach for some producers, but smaller producers say flexible pricing is nothing new. 'Consumers pretty much understand. We tell them in our quotations that prices could change,' a small northeastern tinplate producer said.

It's not only long-term contracts standing in the way of substitution away from high-priced tin for tinplate makers. There also is a lack of easily substitutable material, sources said."

Chromium can be used for only a limited number of tinplate products, the trader source said, making one of the only other options the reduction of coating thickness. "There is no more than 5? pounds of tin on a ton of steel of average thickness," the source said.

If tin prices remain high and push up the pricing of tinplate, food packing companies might begin to substitute away from the product for glass or plastic, sources warned. However, such a shift would take time to implement, thus nullifying any immediate impact.

"It's always been a concern, but it's not so much a concern in the short term," the trader said.

While tin platers struggle with price increases, the rest of the tin industry is scrambling for material. One alloyer reported an outage at the end of June due to non-delivery of material and was recently told by a supplier to go elsewhere for tin. "It's been going on for six months. If I want to buy more than my quota, there's a distinct chance that I won't be able to," he said.

A U.S.-based trader said he recently tried to buy some material but was told "to contact somebody else. Some of the producers are holding back; they want more money."