Major US tinplate producers are seeking a 15% rise in prices from 1 January, according to letters to customers quoted by American Metal Market on Friday. The letters from ArcelorMittal and USS-Posco say that price rises are necessary to cover rising input costs. The two other US producers, US Steel and Ohio Coatings, are expected to follow.
AcelorMittal’s letter describes an “unacceptable” disparity between manufacturing costs and current transaction prices and goes on: "Unfortunately, as we evaluate our input costs for 2008 production it is apparent that our costs on this product line will be increasing even more dramatically, thus widening the negative gap that currently exists."
The proposed price rises are more likely to stick as a result of a number of supply-side changes in the industry, notably the reduction in capacity which has taken place recently at Dofasco (now also part of ArcelorMittal) in Canada.
"The reduction of Dofasco’s production going forward, the weak dollar limiting exports from Europe and Asia, the consolidation of the US mills to the point where there are now only four producers of tin mill products and the higher costs of ocean freight will all help US mills realize higher transaction prices here in the States," a market source told AMM.
Price increases are also on the way in Europe. Executives of ArcelorMittal Packaging Europe told The Canmaker magazine last week that it is currently losing €50 per tonne on its products as a result of “substantial and continuous increases in the cost of raw materials and energy used to produce steel for packaging”. The company will be issuing a new price list for 2008 soon that will allow it to return to profitability.
Chief Executive Gil Perrot, denied that any of its five European tin mills had been earmarked for closure. “There is close to one million tonnes overcapacity in Europe with demand at four million tonnes. This is a concern,” he said. “What do we do? We have looked at many scenarios, but we still have to decide which plan we will implement. Our first priority is to pass through the cost increases.” Meanwhile ArcelorMittal is investing €81 million in D&I steels for beverage cans at its operations in France and Spain.
