A growing market
The production of food cans is on the rise in Russia
The pandemic has not disrupted the Russian metal packaging industry development, reports Vladislav Vorotniko
In 2020, Russia manufactured metal cans of the total worth Rub120 billion ($1.7 billion), slightly increasing production compared to the previous year, despite the overall depression in the domestic packaging industry.
The Covid-19 pandemic appeared to be a tough challenge for the Russian packaging industry. The demand for paper, plastic, and glass has dropped, dragging down market participants’ capacity utilization ratio.
“Before 2019, the [Russian packaging] companies had full capacity utiliation, while now the average ratio declined to 70 per cent. This tendency is associated with the drop in the Russian population’s living standards and a slump in goods consumption. And the package is always a commodity,” said Sergey Katyrin, president of the Russian Trade and Industrial Chamber.
However, on the Russian metal packaging market, the picture is quite different. The production of meat cans increased to 736.3 million units in 2020, or by 10 per cent compared to the previous year, the Russian Gazette, the official publication of the Russian government, said.
The market is likely to keep growing, including because canned food in the country is an essential element of the state procurement system – a significant share of food cans are produced for the national military forces, the Russian Gazette said.
For this reason, the Russian government encourages major research and development work in the metal packaging field. As explained by Dmitry Gordeev, chairman of the analytical department of Gorbatov’s research centre, in particular, Russian scientists currently consider new raw materials to be used in metal can production for both the military forces and the civil segment.
The Russian metal packaging market has been rapidly expanding since 2014, when the government introduced an embargo on a broad range of food products from the US, Canada, the European Union, Australia, and several other countries. Although food cans were not subjected to economic restrictions, this segment benefited from the import-replacement campaign embarked on by the Russian authorities in the food industry shortly after, the Russian consulting agency BusinessStat said.
Between 2014 and 2019, Russian metal packaging production increased from 1.56 billion to 1.99 billion units, BusinessStat estimated. The analysts predicted that in 2021 the production was likely to reach 2.43 billion units.
NEW CANNERIES IN THE PIPELINE
The demand for metal packaging is expected to rise in 2020, thanks to several dozen projects rolled out by companies in the field of food cans production.
For instance, a group of companies, Ruspole Brands, has recently shared plans to build Volgsky can factory, which is pledged to be the Russian biggest food cans producer. With the investment cost of Rub6.5 billion ($90 million), the factory’s designed production performance is expected to be around 50 million food cans per year.
Volgsky can factory plans to produce canned vegetables. Most Russian analysts believe that growth potential in this segment of the domestic food market is far from being exhausted.
However, a much more significant rise in demand is anticipated in the Russian fish industry.
In December of 2020, China introduced an embargo on Russian raw fish imports after several product packages had been found containing Covid-19. During the past several decades, Russia exported around 70 per cent of fish to China, or at least three million tonnes per year.
To not lose money, Russia is urgently developing its domestic processing industry, promising support for new projects in the area of fish cans production, among others.
In the next few weeks, the Russian government would design a set of supportive measures aimed at aiding the companies planning to establish fish-processing capacities in the country, Yuri Trutnev, the Russian president’s representative in the Far East federal district, said during a press conference in February.
“We will round up a small program, involving several supportive mechanisms so that people can establish fish processing plants as fast as possible, so that in one and a half to two years top, we would add enough fish processing plants to close the gap,” Trutnev said.
“Currently, there are 14 fish processing plants operating in the Russian Far East. We believe that 20 to 25 more must be built,” said Herman Zverev, president of the Russian fishermen union VARPE.
As explained by Zverev, storage capacities in the Russian Far East needed to be ramped up by a factor of five times. If those plans are destined to be realised, they could boost the regional demand for cans by several hundred million units.
TIN PLATE IS GETTING BETTER
During the past several years, Russian canneries have repeatedly been complaining about the poor quality of tinplate sourced on the domestic market.
For instance, executives of the Russian cannery Metupak stated that it was not possible to source tinplate of sufficient quality on the Russian market. Metupak was importing tinplate from Slovakia, Serbia, Montenegro, and France.
The biggest Russian metal cans exporter Kaliningrad Packaging Factory, in turn, was purchasing tinplate in Hungary, France, and Belgium, but ups and downs in the exchange rate of the Russian ruble pushed the company to look for alternative suppliers in Turkey and Latin America.
However, there is hope that things may change for the Russian metal packaging industry. In 2020, the Magnitogorsk Iron and Steel Works said it shipped more than 155,000 tonnes of tinplate to the Russian market, which was the last decade’s record figure. The rise in sales might be associated with growing demand and the company’s quality-improving campaign.
The overall demand for tinplate used for food cans production in Russia is estimated at 300,000 tonnes per year, the Magnitogorsk Works said. In 2020, the company accounted for more than half of those sales. The share has risen thanks to the balanced pricing policy and a focus on the customers’ needs, the company added.
Magnitogorsk Works achieved bigger sales in 2010 when an electrolytic tinning unit LPC-3 was still operating at the plant. After its withdrawal, the production of tinplate at the plant has never exceeded 150,000 tonnes per year.
“To maximise customer satisfaction, Magnitogorsk Works is modernising the production of metal cans. The first significant step on this path was the installation in 2012 of the electrolytic tinning line of straightening and stretching machine manufactured by the Italian company Danieli. The main purpose of the unit is to improve the flatness of the tinplate. Reducing the negative impact of one of the major defects – non-flatness – made it possible to achieve new quality characteristics of the product,” the company said.
“Also, other innovations aimed at improving the quality of tinplate were introduced at the electrolytic tinning unit. In particular, to improve the quality of the cut, the main unit of the cut-to-length unit No. 2 was modernised, where gearless shears were installed; the strip preparation unit was equipped with disk shears and a modern flaw detector,” the company added.
OLD TECHNOLOGIES REMAIN
In 2016, Russian consulting agency Abercade estimated that quite a few metal cans in Russia were produced using the so-called heat-sealed method. The technology prohibited in several countries, over the possible food contamination with lead, was common in Soviet times.
The problem was that 40 per cent of all canneries in Russia a few years ago were those Soviet facilities, and a significant portion of them have not altered their production technologies during the past decades, according to Abercade.
“Their [heat-sealed cans] share on the market is reducing. However, they still exist and will continue existing until the government introduces a complete prohibition on their use,” commented a source in the Russian metal packaging industry, adding that this is not a problem of small-scale canneries, as most people used to believe.
“Heat-sealed cans are rarely produced by independent companies these days. In most cases, they are released by food cans producers who run their production lines. They usually have technicians with 30 years’ experience working in the field, who claim that they have been working in this field their entire life, and know how to produce these cans safely for customers, which has nothing to do with the truth,” the source added.
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