Steel Firms Hike Tinplate Prices Amid Gas Supply Crunch, FMCG Packaging Costs to Rise

Rising Costs for Metal Container Manufacturers Amid West Asia Conflict

The ongoing conflict in West Asia has led to a surge in costs for manufacturers of cold coffee, dairy products, adhesives, and paints that rely on metal containers. The supply chain disruptions have resulted in increased costs for tinplate, a key raw material used to make metal containers and cans.

In India, Tata Steel and JSW Steel are the dominant manufacturers of tinplate, catering to the bulk of the local packaging industry's demand. However, due to the war, the companies have struggled to secure propane gas supplies, which are crucial for the coated steel manufacturing process. Coated steel prices have risen sharply, with galvanised plain (GP) steel increasing 4.9% week-on-week on April 6, driven by supply-side constraints and higher input and logistics costs, according to BigMint.

The Metal Container Manufacturers Association (MCMA) has pointed to a 25% impact on production amid reduced supply from the steelmakers and shortage of other key inputs. The industry is facing logistical bottlenecks, with limited availability of shipping containers in certain routes and a heavy dependency on imported products.

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The industry is expected to see a rise in costs, with prices of tinplate increasing in the range of 12-18%. However, some companies have been actively managing supply and optimizing procurement to ensure minimal disruption to operations. Dr. K. Rathnam, Whole-time Director and CEO of Milky Mist Dairy Food Limited, stated that the company has largely absorbed the cost escalation and seen no significant impact on sales volumes of their tinned products.

The Indian tinplate mills are grappling with gas/propane shortages, impacting availability and lead times of tinplate. The availability hinges on the steelmakers' ability to procure gas at elevated prices. The industry's dependence on imported products and the current spike in freight costs are also contributing to the slowdown in procurement from overseas.