With continued strong growth in its markets, aluminium can maker Ball expects European can supply and demand to be very tight this summer, said John Hayes, senior vice president and president of Ball Packaging Europe, during a recent conference call.
"We are actively working with our customers to anticipate their needs," he said. "We continue to monitor and manage this closely." That is one reason why the start-up of its new aluminium beverage can line in Hermsdorf, Germany, and the two can lines in the Hassloch plant-which was severely damaged by fire a year ago-are so important, he said. Ball began making commercial cans on the Hermsdorf line during the third week of March, and the first line in Hassloch came on-stream in April. "We expect the second line in Hassloch to begin production during the month of May," said Hayes.
In Germany, the market generally continues to make progress, although it was a bit slower in January. "If you look at consumption, retail consumption in Germany, it was up over 30% in the quarter, but it was off a very low base," he said. "If you look at fillings in Germany, many of which are exported out of Germany, it was up in the high single digits. So, we are seeing growth in the German market."
He went on to note that aluminium beverage can volumes continue to be quite strong in Europe, with overall industry volumes up in excess of 10% for the first quarter and its volumes up on a similar basis. "The positive trends that we saw in 2006 continue, with growth coming from most areas but in particular Eastern and Southern Europe," said Hayes.
He said the aluminium can throughout Europe is benefiting from a number of trends, mainly substitution of returnable packaging. Multi-packing is becoming more important, and then probably the most important in Eastern Europe is the development of the large format retail trade where the can has traditionally done well. "And assuming a normal summer weather pattern, we expect this good growth to continue," said Hayes.
According to John Friedery, senior vice president and chief operating office of Ball Packaging Americas, in North America, the aluminium beverage can through 2007 does not have a lot of open capacity, so the supply/demand situation "kind of depends on what the demand side does. If it stays, if we saw the kind of growth we did last year ... we'd see more tightness then we even saw in the middle of last year. So, it's in pretty good balance right now, I'd say."
The results in the North American beverage can segment in the first quarter were very strong. "We've increased prices for our products where possible, and those increases take effect at various times throughout this year, so we haven't seen the full impact, yet," he said.
North American beverage can volumes were down 1.4% versus Q1 2006, while the industry was down just over 4% year-over-year. "Volumes were aided by continued strength in the custom can sizes, driven primarily by energy drinks, beer and non-CSD [non-carbonated soft drink] categories," said Friedery.
On specialty cans in North America, "Certainly we continue to see good strong growth, and it is growing, I would say in absolute terms, as much as it ever has," he said. "And pricing is holding up in those areas. We're seeing, again, when we talk about specialty cans, we're talking about a wide range and customers want more and more differentiation. And so there's a different variety and different mix of cans going out." The European specialty can market also continues to grow.
Meanwhile, Chairman, President and CEO David Hoover said Ball is "pleased" with its position and the way the aluminium can market is growing in China, "where we've been for a long time, and we're seeing double-digit market growth there again and are participating in it." The Brazilian market also is growing at double digits.
Ray Seabrook,
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