Sky-rocketing gas prices concern German aluminium industry

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Deliveries of aluminium tubes and aerosol cans to the German market still developed satisfactorily in the first half of 2022, according to trade association Aluminium Deutschland.
It said that the pharmaceutical market, cosmetics and food sectors meant the market for aluminium tubes is stable overall at the previous year's level.
Aluminium aerosol cans saw "double-digit growth", due to a substantive increase in demand for deodorants and hair-care products - with deodorants accounting for about 60% of the total shipments of aluminium aerosol cans to Germany.
Despite that, overall volumes for aerosol cans are still lower than the pre-Covid level.
Aluminium Deutschland further noted that demand is shifted from branded to private label products, especially in the food and cosmetics markets, due to "inflation-related loss of purchasing power by consumers".
The gas market
It continued to emphasise the "still difficult" market situation regarding transport services, which is severely testing "the security of supply". Alongside that, the developments on the energy "and especally the gas market" are causing serious concern to "German manufacturers of aluminium packaging".
The gas levy of 2.419 cents per kilowatt hour takes effect in Germany from October 2022, and Aluminium Deutschland said it will distort competition "to the detriment of German manufacturers", and will cause considerable additional burdens for German-domestic producers of aluminium packaging.
Johannes Schick, chairman of AD's Division of Tubes, Cans and Impact Extruded Parts, commented: "Competitive gas and electricity prices are essential for aluminium production and processing in Germany. Stretching out the gas levy over time and using the excess tax revenue that the state earns from high energy prices to provide corresponding relief for German industry could be suitable political countermeasures.
"An additional burden could arise from the gas consumption reduction of around 20 percent planned by the German Federal Ministry of Economics and Climate Protection.
"This is because such a requirement is likely to lead to cost-intensive electrification measures or even cutbacks in production in the industry, which already saves energy where it can, as energy costs continue to rise. The current and possible future burdens make it more difficult to make investments in the future that will secure jobs and thus impair the innovative strength and competitiveness of the industry in the international environment".
Uncertainty due to deteriorating consumer sentiment
The satisfactory order intake in the first half of 2022 has so far made the industry cautiously optimistic, Aluminium Deutschland suggested.
It said this was due to the excellent recycling properties of aluminium, which provides convincing answers to the sustainability requirements of politicians, customers and consumers.
"However, if consumer sentiment and demand in the markets for fast-moving consumer goods deteriorate in the long term due to the difficult economic conditions, the situation could worsen in the course of the second half of the year," Schick concluded.

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