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Tin mill producers bank on 'home-cooking' revival to stabilize market 


A strong food pack, including what some in the steel industry believe is the largest tomato pack in U.S. history, is whetting the appetites of the limited number of U.S. manufacturers in the tin products market.

The same producers remain active in efforts to promote the use of steel cans for packaging food products, having ceded the beverage can market to aluminum years ago but determined to hold onto or gain market share in the challenge from freezer bags, pouches, cartons and other containers.

The size of the food pack, which is an annual measurement of the amount of food packed in cans in the United States, is one indicator of strength for the tin products market. Another is the fact that in recessionary times, Americans generally dine out less—translating into increased purchases of canned tomato sauce, soups, fruits and vegetables.

ArcelorMittal USA, Chicago, and U.S. Steel Corp., Pittsburgh, are the dominant players in the U.S. tin products market, accounting for most of the U.S. production. USS-Posco Industries Inc., Pittsburg, Calif., a joint venture of U.S. Steel and Posco Ltd., Seoul, South Korea, and Ohio Coatings Co., Yorkville, Ohio, a subsidiary of Severstal North America Inc., Dearborn, Mich., apply tin coating to substrate provided by their parent companies.

The steel can market remains relatively stable, with tin product shipments from U.S. mills hovering around the 3-million-ton-per-year mark, and tin products avoided the wild price fluctuations other steel products faced throughout 2008 and in 2009.

"Usually when you get into economics like we are in now, you see more people buying food in cans," said Mark Glyptis, president of United Steelworkers union Local 2911, which represents workers at ArcelorMittal Weirton in Weirton, W.Va. "They eat out less. They stay home and buy more food cans. The food pack was good in 2009. You can see that in our order book. It's been strong. We've seen pretty strong demand all year for food cans, coffee cans and aerosol cans."

U.S. Steel and ArcelorMittal both expected strength in tin products to continue through the end of 2009 and believe prospects are good for 2010 as well.

"We expect improvement in our overall fourth-quarter results, mainly as a result of increased demand for flat-rolled products in North America, driven primarily by automotive markets and continued strength in tin mill markets," John P. Surma, chairman and chief executive officer of U.S. Steel, said.

In 2009, producers were able to push through tinplate price increases ranging from 15 to 35 percent compared with 2008 as they rolled a competitive market price adjustment into base pricing in an effort to bring contract pricing in line for most customers. The plan succeeded, leading in part to predictions that pricing for 2010 will be similar to 2009.

"The market (for tin mill products) has been pretty decent," Phil Withum, vice president of commercial at Ohio Coatings, said. "The market is pretty stable as far as food cans and aerosol cans are concerned. Naturally, we would like to do more, but we can't really complain very much."

Rich Tavoletti, executive director of the Canned Food Alliance, said that historical can shipment data shows food can shipments have been relatively stable over the past five years, varying between 29.6 billion and 30.5 billion cans per year.

Total U.S. tin mill product shipments stayed at around the 4-million-ton-per-year level in the late 1990s, according to the American Iron and Steel Institute (AISI), Washington. Industry consolidation brought about a reduction of some tin mill capacity to the point that shipments now are between 2.8 million and 3 million tons per year.

The Canned Food Alliance, funded in part by the AISI, was created by steel producers who wanted to combat declining shipments. "What we are doing is a lot of consumer research to promote the nutritional value of food in cans vs. its fresh and frozen counterparts," Tavoletti said.

The Canned Food Alliance recently worked with the University of California at Davis on a study of the nutritional value of canned, fresh and frozen fruits and vegetables. Among the study's findings were that the canning process locks in nutrients at their peak of freshness, and due to the lack of oxygen during the storage period the canned fruits and vegetables remain relatively stable up until the time they are consumed and have a longer shelf life.

These are the kinds of messages the Canned Food Alliance is taking to consumers to try to help steelmakers hold onto market share against inroads from freezer bags, aluminum, plastics, cartons and other containers. Such efforts seem to be working, Withum said, although he acknowledged that other materials have made some inroads.

"It's hard to judge how much market share has changed in the short term," he said. "These kinds of things happen gradually, over a period of four or five years. I don't think we have seen a particularly big move, though." Scott Robertson

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