Battle for Brazil can market

CSN, the Brazil-based flat steelmaker, and Canadian aluminium manufacturer Alcan are on a head-on collision course over which will dominate the metal packaging market, reported Brazilian business daily Gazeta Mercantil​.

CSN is investing heavily to gain market share of the canned beverages industry, currently dominated by Alcan, while the Canadian aluminium giant is taking aim at the canned food market, where CSN currently exerts control.

The steelmaker has earmarked $40 million (€41m) over the next two years to improve the quality of its Draw Wall Ironing so as to produce cans with two pieces of the tin plate steel it makes.

"Five years from now, we want the Brazilian market to look more like the European one where 50 per cent of the beverage cans are made with steel,"​ Joao Audi, director of CSN's packaging division, was quoted as saying.

Output of the product line will also increase from 35,000 tons a year to 180,000 tons a year, he said.

In the Brazilian can market, steel sheets account for a mere 5 per cent of packaging material. CSN believes it can improve sales just based on the 5 per cent annual growth rate of the market. Brazil's packaging market, including other materials, has an annual turnover of R$15 billion (€5.7bn).

CSN is already the world's largest producer of steel sheets, turning out 1 million tons a year. The steel company's metal sheet sales account for 25 per cent, or R$1 billion (€380m), of its total revenue. Its plant produces 6 billion units annually, of which 70 per cent is consumed on the domestic market and the remaining 30 per cent exported.

Alcan, for its part, has invested around $500 million in the last decade to establish one of the world's most modern aluminium plants.

This year, the Montreal-based company is investing $100 million to develop aluminum plates for canned food. Alcan wants to reproduce the European experience of canned foodstuffs in which 20 per cent of the market uses aluminum. The company will debut in the tuna fish segment.

Alcan's aluminium rolling mill in Pindamonhangaba, Sao Paulo state, produces 230,000 tons a year but has a capacity for 300,000 tons a year. Close to 70 per cent of its output is used by the canned beverage segment, and the unit's revenue forecast for this year is $300 million.

The company plans to increase production from 12 billion units of cans made in 2001 to 14 billion units this year. Alcan's total revenue in Brazil, including its six other units, stands at US$1.4 billion.