The American Metal Can Market Languishes Against the Pandemic and Competition from Plastic Containers

IndexBox has just published a new report: 'U.S. Metal Can Market. Analysis And Forecast to 2025'. Here is a summary of the report's key findings.

In 2019, the U.S. metal can market decreased by -2.2% to $12.6B, falling for the fifth consecutive year after two years of growth. Over the period under review, consumption continues to indicate a slight reduction. The growth pace was the most rapid in 2014 when the market value increased by 1.6% y-o-y. As a result, consumption reached the peak level of $14.1B. From 2015 to 2019, the growth of the market remained at a somewhat lower figure.

The market remains almost entirely supplied by domestic manufacturers. Despite its rapid growth over the last two years, the share of imports in terms of total consumption remains negligibly small, amounting to near 3%. The market, therefore, is not really an attractive destination for suppliers from abroad. In value terms, metal can production declined slightly to $12.4B in 2019 (IndexBox estimates). Over the period under review, production saw a perceptible reduction.

The long-term contraction from 2015-2019 is largely shaped by a sharp drop in oil prices in 2015. It caused a simultaneous decline in global prices for many commodities, including metals, leading to a decrease in raw material cost for the production of metal cans. Moreover, prices for polymer materials also dropped, making the competitive plastic packaging more affordable.

Metal cans are mainly used as packaging for food and drink items, as well as for laundry goods, personal care goods, and chemicals, incl. solvents for paints, automotive chemistry, etc. Accordingly, the market is affected, on the one hand, by an increase in the population and its income, and on the other hand, the general dynamics of the economy and industrial production.

In early 2020, the global economy entered a period of crisis caused by the COVID-19 pandemic, due to which most countries in the world put on halt production and transport activity. The result will be a drop in GDP relative to previous years and an unprecedented decline in oil prices. Since production in many countries to some extent stops for several months, international transport was almost completely discontinued and domestic travel was minimized, oil demand fell sharply, which led to lower prices and heavy oil production cuts taking place.

This drop in oil prices in 2020 is to make the competition with cheaper plastic containers more severe. The U.S. is expected to face a short-term recession, with the contraction of GDP of approx. -3.6% in 2020, as the hit of the pandemic was hard and unemployment soared due to the shutdown and social isolation. This, in turn, is to affect the demand for metal cans across all the major downstream industries.

Even more noticeable decrease can occur in the segment of chemical and construction containers, containers for fuel and lubricants. As the demand for trips fell sharply, the need for vehicle maintenance also contracted, which in turn reduces the demand for containers for related products. In the construction sector, there may also be a moment of uncertainty due to reduced income for potential home buyers - this, in turn, may also lead to a decrease in the consumption of metal cans for construction-related products.

In the medium term, should the pandemic outbreak end, and the economy start recovering in 2021, the market trend is to stabilize, driven by the fundamentals that existed before 2020.

Exports from the U.S.

In 2019, overseas shipments of metal can increased by 35% to 1.4B units, rising for the second year in a row after two years of decline. Over the period under review, exports, however, continue to indicate a deep contraction. Exports peaked at 3.7B units in 2015; however, from 2016 to 2019, exports remained at a lower figure.

In value terms, metal can exports expanded rapidly to $281M (IndexBox estimates) in 2019.

Exports by Country

Canada (916M units) was the main destination for metal can exports from the U.S., with a 64% share of total exports. Moreover, metal can exports to Canada exceeded the volume sent to the second major destination, Mexico (250M units), fourfold. The third position in this ranking was occupied by Trinidad and Tobago (61M units), with a 4.3% share.

From 2013 to 2019, the average annual rate of growth in terms of volume to Canada totaled -12.5%. Exports to the other major destinations recorded the following average annual rates of export growth: Mexico (+13.0% per year) and Trinidad and Tobago (-1.3% per year).

In value terms, Canada ($197M) remains the key foreign market for metal can exports from the U.S., comprising 70% of total exports. The second position in the ranking was occupied by Mexico ($38M), with a 14% share of total exports. It was followed by Jamaica, with a 2.2% share.

From 2013 to 2019, the average annual rate of growth in terms of value to Canada totaled -8.1%. Exports to the other major destinations recorded the following average annual rates of exports growth: Mexico (+12.9% per year) and Jamaica (+7.9% per year).

Companies Mentioned in the Report

Ball Corporation, Crown Holdings Inc., Silgan Containers, BWAY Corporation, Silgan Holdings, Independent Can Company, Exal Corporation, Conco, Can Corporation of America, Ds Containers, Silgan White Cap Corporation, CCL Container Corporation, Ball Metal Food Container Corp., Justrite Manufacturing Company, Rexam Beverage Can Company, Silgan Containers Manufacturing Corporation, Bway Holding Company, Metal Container Corporation, Silgan Containers Corporation, Crown Cork & Seal Usa, Reynolds Metals Company, PSC Industries, Foulkrod Associates, Brockway Standard (new Jersey), Ball Aerosol and Specialty Container Inc., Crown Beverage Packaging, Ball Metal Beverage Container Corp., Ball Packaging, Bway Parent Company, Bway Intermediate Company, Crown Cork & Seal Company

Source: IndexBox Market Intelligence Platform