CHICAGO The North American can market remains important to Novelis Inc. even if it is in decline and unlikely to reverse course in the short term, a company executive said.
Besides remaining a large-volume market, it may also see growth in the future, particularly if Novelis can develop a can made with 100-percent recycled material, Marco Palmieri, senior vice president and president of Novelis North America, said in an interview with AMM.
Such a product, referred to by the Atlanta-based aluminum company as "Evercan," has the "potential to be a game-changer in the market," Palmieri said. The current decline in can demand is driven in part by health-conscious consumers drinking less soda and opting instead for healthier beverages.
But those same consumers might embrace a completely recycled product, Palmieri said. "I strongly believe in that. Consumers will go after new cans."
Novelis can guarantee 70-percent recycled content in its can products overall and 90-percent recycled content in the sheet used to make can bodies, Palmieri said. Among the sticking points are the head of the can, where magnesium and prime aluminum is needed for hardness, he said. "We basically have to change the alloy. And then how do you make a can head that is compatible with the can body? ... Thats really the technical challenge we have to resolve." Given the complexity of the task, Novelis doesnt have a firm timeline for reaching a 100-percent recycled can but is pushing to gradually increase recycled content, he said.
In the meantime, the North American can market is grappling with excess capacity that is driving down prices and hurting the entire supply chain, Palmieri said. "Im a firm believer that everyone has to make money: our suppliers, us and our customers."
The supply glut could be reversed as Novelis and its competitors allocate capacity away from the can market and toward growing automotive demand, Palmieri said. "That will reduce the availability of hot mill time for the can market, and it will probably change the dynamics of (the can) market."
The can market remains a growth sector in Asia, South America and Europe as traditional materials, such as steel and glass, are replaced with aluminum, Palmieri said, estimating worldwide annual can market growth at roughly 4 to 5 percent.