Prices of canned goods to increase

Prices of canned goods are seen to increase in the third quarter of the year due to the expected five percent hike in the prices of tin cans used for processed canned goods.

In a letter dated July 26 to Trade and Industry Secretary Peter B. Favila, the Tin Can Manufacturers’ Association of the Philippines Inc. (TCMAPI) said that tinplates are now at $1,240/metric ton (MT) from only $1,100/MT in December 2004.

"The increase would translate to an increase of P3.40 per tin can," TCMAPI chairman and president Henry A. Tanedo said yesterday.

Tinplates account for about 20 percent to 40 percent of the cost component in the manufacture of canned products such as sardines, corned beef and processed milk.

Tanedo warned that "indications of price stability have not been manifested for the fourth quarter. This means a further hike may occur for this period."

"The recent price drop the steel industry has seen for hot rolled coils (HRC) and cold rolled coils (CRC) has not occurred in the high grade steel like the tinplates used for cans, " Tanedo explained.

Furthermore, he said, a price drop "is not expected in the near term as market dynamics for these products differ. Steel mills are cutting production to maintain, if not keep prices moving up."

Tanedo also pointed out that "tin can makers have not fully recovered increases in tinplate costs which started in early 2002."

The tin can makers, Tanedo explained, were not able to recover their cost "because the DTI, as early as 2003, had intervened for us to hold-off implementation of full price adjustments in order to moderate inflation."

Current can prices, thus, at best reflect tinplate prices from almost a year ago, Tanedo said.

"But this time around, cost pressures from the exchange rate and oil prices, among other things, also continue to rise," Tanedo said.

Tanedo, however, gave his assurance "our industry continues to implement measures to soften the effect of tinplate price increases such as the use of thinner gauge tinplates and tin free steel."

Tanedo lamented though that "the frequency and magnitude of the price increases have overwhelmed the positive effects of such efforts, although they have worked to somehow blunt it."