Despite the continuing high price of aluminum foil, demand for the packaging material continues to rise, Europe's industry association said this week.
Aluminum, like plastic, is one of the key materials used in food and beverage packaging. However rising energy costs over the past year has led to suppliers hiking prices in a bid to maintain their margins.
Faced with growing resistance from their customers to further price rises, companies such as Alcan have been finding ways to instead cuts costs as a means of maintaining a competitive position in the market.
Sales of aluminium foil from EU-based suppliers soared to a record 870,300 tonnes last year, a growth of 3.7 per cent over 2005, the European Aluminium Foil Association (EAFA) said in releasing the figures.
Demand for thinner gauges, which are used mostly in flexible packaging, grew by 2.9 per cent. Demand for thicker gauges, mainly used for the manufacture of containers and technical materials, rose by 7.8 per cent.
EAFA president Fred McDonogh said industry expects the growth in demand to continue during 2007 despite the rising cost of the material.
"The continued high price of raw materials is causing concern among customers," he said. "However, the aluminium foil rollers are co-operating closely with customers to continuously improve competitiveness of alufoil based packaging solutions through product innovation, as well as through process and supply chain optimisation."
Exports outside the region were stable during 2006.
EAFA members produce about 98 per cent of the supply in the European foil market, representing nearly all the countries in Europe, including Russia and Turkey.
About three quarters of aluminium foil is used in packaging. It is used for flexible packaging and containers.
The automotive sector is also a big market. Aluminium foil is also used as insulation material and for other industrial applications.
EAFA represents about 120 members based in the EU, Armenia, Bulgaria, the Czech Republic, Hungary, Norway, Russia, Slovenia, Switzerland and Turkey.
Alcan, one of the world's largest aluminum producers, last year launched a research and development centre in France it says will allow the company to cut costs by up to 20 per cent.