Food industry selling ready-to-eat items like luncheon meat, sausages and hotdogs as well as dairy products and legumes packed in tin cans are watching the global trend with concern as tin is not only going to be costlier but also it may become scarce if steel prices continue to rise.
It is going to effect even non-food items like pigments and auto lubricants. Afroz Hadi, marketing manager of Dubai-based Arabian Can Industry, says tin prices will also face similar price pressures because tin is used to coat steel to prevent corrosion.
Since the construction and automobile industries are rebounding after a two-year slump, tin will also become more expensive. Tin is currently selling at $1,400 to $1,500 per ton. In 2008, just before the start of the global financial crisis, steel prices peaked from $900 per ton to $1,900 per ton.
“There are indications that this will touch the 2008 level of $1,900 in coming months,” Hadi said.
Arabian Can Industry, belonging to Al-Ghurair group, is one of the leading three-piece can manufacturers in Dubai. It imports tinplate from Europe and the Far East. Hadi said as far as can manufacturing is concerned, his company has been doing good business and recording steady growth.
“People have to eat and many prefer convenience,” he said. “It is debatable whether consumers prefer fresh, canned or frozen food — but they are definitely more confident about cans.”
But he was concerned about the rising cost of production.
“Tinplate is a value-added product. Coatings applied on tinplate to produce various types of products require extra effort and money. Going by the past experience, we know that steel mill owners would be tempted to supply more to the construction and automotive industries at the cost of our demand,” said Hadi, whose company supplies empty tin cans to some major regional and international companies.
Hadi said economic recovery was speeding up the rebound in the construction sector. After enduring a slowdown in 2009, spending in the construction sector in the Middle East and Africa region is forecast to expand by 2.2 percent this year. He said the spike in spending on infrastructure and construction projects is sure to increase orders from steel industry.
“This will ultimately lead to the shortage in the availability of tinplate with steep hike in its cost,” he noted.
