New US Al mills to replace can sheet imports

The three aluminum rolling mills announced this year and set to come on line by the end of 2026 will mostly eliminate US imports of beverage can sheet, even given an explosion of growth in new packaging demand.

Conservatively, Argus estimates more than 700,000 tonnes (t)/yr in extra beverage can sheet production will come on line based on mill announcements. That would more than fulfill current US needs and likely satisfy announced growth in demand.

Steel Dynamics said its 650,000t/yr southeastern mill will focus 45pc on beverage can sheet — or around 292,000t/yr. Meanwhile Novelis targeted "more than half" of its 600,000t/yr Bay Minette, Alabama, mill to beverage can sheet, even assuming only 60pc, the mill would produce 360,000t/yr.

Ball has yet to announce the fine details of its Los Lunas, New Mexico, joint venture with Manna Capital Partners, but even accounting for a much more modest 100,000t/yr capacity, this would add up with the other entrants to at least 752,000t/yr of new can sheet output, barring future changes in product mix.

The US imported 222,614t of can and tab stock in 2021, according to US Department of Commerce data, which on the surface, makes the planned 752,000t/yr or more ramping up in capacity seem possibly excessive, but since 2018, packaging companies have announced investments that will add up to 680,000t/yr in new can sheet demand, according to Novelis chief executive Steve Fisher.

"We're not surprised others are following our lead. We fully anticipated the market requiring more beverage can sheet and feel very comfortable," Fisher said when asked about the suddenly much more crowded can sheet space.

At the beginning of the year, the only integrated, greenfield rolling capacity in the works was Unity Aluminum, which has been trying to clinch enough funding to fully kick off construction since 2017. But by the end of July, SDI, Novelis and Ball had announced new, fully-funded mills, representing the first investments of their kind in decades, when excluding stalled projects such as Unity.

In addition to new capacity, Arconic is also in the process of returning its Tennessee mill to a majority can sheet product mix following an expired noncompete agreement with Alcoa which ended in 2020.

Fillers such as Ball and Ardagh are looking to reduce the length of their supply lines following Covid-19-related logjams that have affected nearly every industry, but the appeal is more than that, said Fisher.

"They don't want the geopolitical risks, and they don't want the carbon footprint. There's many reasons," he said.

In 2021, China, Thailand and Saudi Arabia accounted for 71pc of US can sheet imports, entailing extra carbon emissions to transport a product which is appealing in part for its low-carbon, recyclable nature. Local supply chains help to cut down on excess transportation emissions, giving aluminum an even greater edge in its battle for market share with other materials like plastic.

For the past several years, the US has relied heavily on imported beverage can sheet as domestic mills moved away from the product in favor of more specialized areas, such as automotive sheet, leaving packaging underserved. But renewed investment in canning and growing public interest in sustainability, has given US mills the confidence that devoting more attention to can sheet again will be worth their while.

By John Betz