Tinplate / Producers look for up to 50% increases in contracts

Producers look for up to 50% increases in tinplate contracts
Tuesday, 16 September 2008
Tinplate producers are likely to seek price increases of up to 50% on their 2009 annual supply contracts with packaging industry customers, sources at ArcelorMittal tell Steel Business Briefing.
The targeted increase in tinplate contract prices is said to reflect the increased costs of iron ore, alloys, energy, transport and labour, as well as price developments in steel which have seen spot prices rise by 60-100% in the first half year, sources add.
It is anticipated that the targeted level of increase would remove the need to levy any surcharges next year, as occurred halfway through this year, the sources say. If this is the case it would suggest that strip mills anticipate significant increases in their input costs in 2009, and possibly higher steel prices as well.
SBB also understands that tinplate producers are still keen to move from January to December annual contract periods to an April to March model. This may require some interim adjustments to be agreed by negotiation.
Meanwhile, market participants suggest that tinplate is becoming unprofitable for a number of steelmakers, and they are attempting to reduce exposure to this product. It is rumoured that ArcelorMittal aims to reallocate some tinplate production capacity in Europe and North America to more profitable product segments.
Corus announced in April its intention to cut 300,000 tonnes/year of tinplate capacity at its plants in Norway and the UK because of a difficult market for packaging steels.
See also: “Are long term steel contracts unfit for purpose?” SBB Insight No.77, September 11.
© Steel Business Briefing 2008