FOODnavigator.com

Aluminium foil sales hit all time high while costs rocket

16/03/2005 – Aluminium producers can expect a good year in 2005,with foil
sales hitting an all-time high, but packagers will have to deal with
all-time high costs, writes Anthony Fletcher.

Shipments of aluminium foil reached a record high in 2004 with deliveries
reaching 820,350 tons, an increase of 1.1 per cent over the previous year
(811,400 tons), according to the European Aluminium Foil Association (EAFA).
The association claims that the growth figures disguise an even better
picture when the ongoing practice of down gauging – decreasing thickness –
in aluminium foil rolling is considered. Over the last 30 years the average
down gauging effect in packaging applications was around 30 per cent.

However aluminium prices reached a ten-year high this week at $2,016 a tonne
according to the Financial Times, and strong global economic growth and
solid demand could continue to drive prices even higher – bad news for
packaging firms.

The higher metals prices caused both UBS and Merrill Lynch to up their
long-term price forecasts for metals. Merrill Lynch said this week
commodities were in a long-term bull market.

Despite the cost increase, EAFA believes that strong sales were driven as
much by exports as by sales within the EAFA region, which includes Armenia,
Bulgaria, Czech Republic, EU15, Hungary, Norway, Russia, Switzerland and
Turkey.

`We expect this trend to continue in 2005,’ said Bill Morris, president of
EAFA. `The level of demand of aluminium foil especially for exportation
outside the EAFA region underlines the global leadership of the European
foil industry in terms of quality and competitiveness.’

Approximately 75 per cent of aluminium foil is used in packaging where its
characteristics of strength, formability and barrier properties have made it
an essential part of many flexible packaging and container applications.
EAFA argues that the number of new products that feature innovative uses of
alufoil-based packaging indicates a healthy future for the material.

The solid sales figures come after a concerted effort by EAFA to better
communicate to food packagers the benefits of using the material. The
association has consistently argued that many of the benefits that aluminium
foil brings to packaging are hidden from both packer fillers and consumers
because it is often used in association with other packaging materials and
is frequently invisible to the naked eye.

This, says the EAFA, detracts from the fact that aluminium is the one of the
best solutions for any product that requires a barrier material that
provides the extra elements of extended shelf life and true impermeability
to gases, moisture, light and UV rays.

And despite the ten-year price high, the association claims that the
packaging industry should see the value and flexibility of the material.
`Production and manufacturing techniques have led to down-gauging – 20 per
cent decrease in thickness in 10 years – at the same time as maintaining or
even improving machineability and performance characteristics. All of which
provides increased productivity and added value to the conversion process,’
said Morris.

One major selling point of aluminium of course is that it can be recycled
repeatedly at a fraction of its original energy cost and modern separation
techniques mean aluminium foil in household waste can be extracted and
recycled. It is suitable for both separate and multi-material collection
systems according to national and local conditions.

The energy content of foil laminates can also be recovered by thermal
treatment.

With 123 members EAFA is the international body that represents the
interests of the major rollers, converters, household foil rewinders and
container manufacturers in Europe.