September 28: A report on the beverage can market in Europe suggests that concern amongst investors that additional capacity increases might reach beyond demand from drinks companies — and potentially denting margins — is misplaced.
Published by New-York-based Wachovia Capital Markets equity research department, the 14-page report notes that canmakers appear to have been expecting demand to increase by 10 percent in 2007 and 5 percent in 2008, reaching 52.6 billion.
Canmakers have been planning to add 7.3 billion capacity, with either new plants, additional production lines or upgrades.
That would increase capacity to 53.7 billion resulting in an affective capacity utilization of 98 percent, says the report, the assumption apparently being that capacity matched demand in 2006.
From this, the report — which attributes The Canmaker magazine as one of its sources — concludes that increased demand from beer and beverage manufacturers will unlikely to be met.
