Metal Bulletin report on tinplate pricing outlook, quarterly contracts etc

Metal Bulletin report on tinplate pricing outlook, quarterly contracts etc 

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."

ArcelorMittal Spain rearranges coil supply to tinplate lines

Factiva: "ArcelorMittal Spain could be relocating the cold rolling and galvanising lines from its Etxebarri plant to its Avils steelworks over the next few weeks, according to local industry rumours. However, the company tells Steel Business Briefing that the only change taking place is a reorganisation of coil deliveries.

“With the aim of maximising synergies in its industrial operations, ArcelorMittal has decided to supply the tinplate lines of its factory in Etxebarri with cold rolled coils from the company’s site in Avils,” ArcelorMittal Spain comments. Up until now, the Etxebarri plant only received hot rolled coils from Avils.

The company claims this reorganisation will result in lower costs and improvement in the quality of the products. It should thus contribute to ensuring the long-term sustainability of ArcelorMittal’s tinplate production in Spain."

Tinplate Prices Going Up While Steel Coil Comes Down

MetalMiner: "In contrast, the Asian market for tinplate follows the underlying steel prices on a month by month basis. Baosteel, China’s largest tinplate producer, has been dropping tinplate prices since a peak in October while Chinese-Korean and Chinese-Japanese producers have been forced to follow in their wake. Chinese tinplate production grew by 600,000 tons in 2008 as two new tinning lines came on stream at Baosteel and one new one at Zhongyue POSCO. 

As a result, domestic Chinese supply-demand pressures will ease this year even as demand continues to grow from a current level of about 2,3 m metric tons. In the wider SE Asian market though Japanese tinplate manufacturers are trying not to reduce prices any further for the second quarter and are even talking of price increases. With the Chinese mills willing to export and new tinning lines due to come on stream in Thailand later in the year, it is doubtful how successful their approach will be. Buyers generally have been reluctant to book forward as they have seen the steel makers’ costs dropping. Forward sales are therefore below levels last year and negotiations are proving difficult."

Article discussing global tinplate markets, supply, prices..

10-K: Ball Corporation report

MarketWatch: "Additionally, during the fourth quarter of 2008, it was determined, based on market conditions that we would remain in the custom and decorative tinplate can business, which resulted in the reversal of $5.4 million in business consolidation charges previously recorded" 

(In October 2007, Ball had announced plans to close aerosol manufacturing plants in Tallapoosa, Georgia, and Commerce, California, and announced its intent to exit the custom and decorative tinplate can business located in Baltimore, Maryland.)

As reported in our second quarter Form 10-Q, during the third quarter our aerosol business experienced a tinplate supply issue due to a major supplier's failure to deliver committed metal. While this matter affected a limited, seasonal part of this segment's product mix, it caused a supply disruption with some of our customers that resulted in lost sales and profitability for Ball during the year. We have made every effort to fulfill our customers' requests and minimize the impact on our customer base. We are now receiving the necessary tinplate to produce products for our customers, and future raw material supply arrangements are scheduled.

EU tinplate stockists concerned about credit lines tightening

Metal Bulletin: "Tinplate stockists in Europe are concerned about tightening credit lines at a time when contract prices with the mills have increased and left them open to huge potential losses in the event of customer payment defaults, market participants told MB. 

“Insurers and banks will look at the credit terms and shorten them in an industry that’s heavily reliant on credit. There are huge capital outlays to buy tinplate, but we have to wait for money to come in from our customers. You find yourself with a few million pounds out there and no cover,” one tinplate stockholder said. 

“This is going to put pressure on the sector. The average invoice value is going through the roof,” he added. 

Tinplate in the European domestic spot market was being quoted at around €1,315-1,380 ($1,675-1,758) per tonne for February production and at around £1,180 ($1,700) per tonne in the UK, according to Metal Bulletin Research. 

The Hidden Commodity in Canned Food

BusinessWeek: "The exact price for tinplate and individual steel products is hidden unless you're looking to buy. 

While commodities like zinc, copper, oil, and gold are relatively pure, steel products are diversified and use-specific. They don't come in lump sums, so price depends on element and design characteristics. 'You can't take bar steel and use the steel for Campbell's Soup,' says Mark Parr, a steel industry analyst with Cleveland's KeyBanc Capital Markets. Steel companies simply report total tonnage produced and aggregate prices. Even the number of cans produced is veiled. For reporting purposes, the Federal Trade Commission allows makers of steel and aluminum cans to combine their output figures of those products to protect trade secrets, given the dearth of players. Through the first three quarters of 2008 there were 22 billion food-can shipments, slightly below the 2007 pace, according to the Can Manufacturers Institute, the industry's Washington-based trade group.

For tinplate production, a tiny part of the steel industry, producers and canners traditionally set yearlong contracts. This insulates the average consumer from volatility in food prices, but can sometimes shortchange the steelmaker."

We are watching you closely, Impress boss tells tinplate mills

The Canmaker: "The boss of a leading canmaking company has told tinplate suppliers to “recognise the current economic cycle in their pricing” and to provide a supply service that matches recent dramatic price increases."

Labbé warned that he would be watching how the tinplate mills would be managing their supply chain and pricing. “We are monitoring their positions closely,” he said.

Director of sourcing at Impress, Nick Ince, detailed what the company expected from its tinplate suppliers. “Our suppliers have explained the need to place their tinplate business on a viable economic footing for the long term,” he said. “However, in exchange, we at Impress expect reliable supply, suitable product quality and supply flexibility to take account of the dynamics of customers’ activities.”

Labbé explained the background: “The supply chain difficulties encountered in 2008 were undoubtedly the number one business challenge for Impress this year.