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Japan's Showa Denko to halt aluminum can output for non-alcoholic drinks

Tokyo β€” Japanese rolling mill Showa Denko said Tuesday it plans to stop production of aluminum cans for non-alcoholic beverages in June 2020 due to low demand.

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It will shut lines in Oyama and Hikone plants for non-alcoholic beverages due to competition from plastic bottles, while output of cans for alcoholic beverages will continue, the company said. The company currently operates three can manufacturing plants in Oyama, Hikone and Omuta cities.

The company sold 3.4 billion cans to beverage makers in 2018, the company spokesman said. Non-alcoholic beverage cans accounted for around 40% of its capacity, the spokesman said, without elaborating further.

Japan's total can output was 21.3 billion cans in 2018, consuming 407,988 mt of cansheets, according to industry data.

Non-alcoholic beverages accounted for 36.8% of Japan's beverage can production in 2018, according to Japan Aluminum Can Recycling Association.

Industry sources have said one international beverage maker started a shift to biodegradable PET bottles from aluminum cans about two years ago to address environmental concerns, costs, and weight reduction.

Meanwhile, Showa Denko also said it proposed to change the long-term can supply contracts with beverage makers, by introducing a formula-based pricing to reflect changes in aluminum ingot prices systematically. Currently, can prices are single prices that do not reflect changes in the aluminum market, the spokesman said.

Showa Denko, like other Japanese canmakers, sources aluminum sheet feedstock from local rolling mills on term contracts, sources said.

Sheets are mostly 3000-series alloys with up to 1.5% manganese, 1.3% magnesium and 0.25% copper content in addition to aluminum.

Primary and recycled aluminum are used for cansheet production. The spokesman declined to elaborate on the company's procurement.

-- Mayumi Watanabe, mayumi.watanabe@spglobal.com

-- Edited by Nurul Darni, newsdesk@spglobal.com