Boxed: Tin package producers see output fall 40%

Shetron, a mid-sized metal container manufacturer, had to refuse a huge order for metal cans to pack mango pulp due to ensuing shortage of tinplate.

Despite sharp rebound in demand for metal packages, the company is expecting its production to drop 30-40 per cent this year to about 11,000 tonnes against 16,000 tonnes logged last year.

Production cuts

Just like Shetron, many small and medium sized metal container makers are cutting down on their production due to sharp drop in import of tinplate/tin-free steel.

The slowdown in production comes when MSMEs are limping back to normalcy from Covid disruption with the government stimulus.

The industry processes seven-lakh-tonnes of tinplate into containers, easy-open ends and peel-offs. Domestic tin supply is about 4.50 lakh tonnes, with Tata Steel and JSW Steel being the dominant players and imports making up for the rest.

Import of tin plates has almost come to a standstill post implementation of mandatory Bureau of Indian Standard certification for importers. India imports tinplate largely from the US, China, Germany, Japan and Belgium. Overall, the industry expects tin can and container production to drop 30-40 per cent this fiscal.

Diwakar S Shetty, Executive Chairman, Shetron said the inventory at both the manufacturing and user industry has long exhausted as the entire supply chain works on in-time delivery.

Given the uncertainty on tin plate supply most can and packaging producers have stopped taking fresh orders, he added.

Price hike by 60%

The quality control order mandates overseas tin plate exporters to register with BIS and obtain certification for tapping the Indian market. For international tin plate suppliers, India is fairly a small market, so they are not keen to get into lengthy procedures and stopped supplies to India, said a metal container company executive.

Taking advantage of the situation domestic tinplate suppliers have increased prices by 60 per cent since last October to ₹1.15 lakh a tonne, he said.

“If government does not act now, all the guarantee-free loans and other concessions given for SMEs as Covid relief through banks will go down the drain and NPAs will start raising,” he added.

RS Sodhi, Managing Director, Gujarat Cooperative Milk Marketing Federation (Amul) said the supply chain disruptions are brewing and will accentuate further, especially for those with limited raw material bandwidth.

“The disruption has come at a time when we had targets to increase manufacturing more products, which are expected to be in high demand, especially in the upcoming festive months,” he added.

Amul uses tin cans for packaging ghee, cheese and other milk-based health drinks which see good demand during the festival season.

With an annual turnover of ₹10,000 crore, the metal packaging industry employs about one lakh people and is dominated by MSME sector.

Sanjay Bhatia, President, Metal Container Manufacturers Association said the quality and control order has led to complete ban on import of non-prime material required by the metal packaging industry for various non-critical and non-edible products such as paints, chemicals, stationery items, which was mainly required by the units in the micro and small sector.

This has resulted into loss of business and jobs for a large number of traders who were engaged in this business for over five decades, he said.

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