Cathay Pacific Haitong: The supply and demand pattern for two-piece cans is improving the layout when overseas production capacity exports are underway

The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that the increase in domestic demand for two-piece cans is driven by an increase in the beer canning rate. It is estimated that domestic demand for two-piece cans will reach 67.8 billion cans in 2027. The bank believes that this profit recovery will be stronger than before. Leading companies all have high market shares, and profit flexibility is expected to be fully unleashed. The overall domestic supply pattern for two-piece cans has improved, leading companies have a high market share and good profit flexibility. Increased tank prices combined with production capacity overseas are expected to continue to improve profits.

Cathay Pacific Haitong's main views are as follows:

Increased beer canning rate drives demand for two-piece cans

Downstream demand for two-piece cans is dominated by beer, accounting for 59%. In 2025, China's beer canning rate is only 31.5%, which is significantly lower than the canning rate of 58% or more in developed countries such as Britain, America, and Japan. There is still plenty of room for growth. Under competitive beer stocks, the increase in domestic demand for two-piece cans is driven by an increase in the beer canning rate. According to estimates, domestic demand for two-piece cans will reach 67.8 billion cans in 2027.

The supply and demand pattern has improved, and the profit flexibility of leading companies is sufficient

According to estimates, the total domestic production of two-piece cans in 2025 is about 74.6 billion cans, and the state of overcapacity is still maintained. As the industry's overall new production capacity decreases, and leading companies relocate some of their production capacity overseas, it is expected that the supply pattern will be further improved and the balance between supply and demand will be promoted. The bank believes that this profit recovery will be stronger than before, leading two-piece can companies have consistent profit insurance claims, and downstream breweries are further deepening, and downstream beer companies are promoting high-end products. The bank believes that this profit recovery will be stronger than before. The leading companies all have high market share, and profit flexibility is expected to be fully unleashed.

Weight reduction helps reduce costs, and high-end drives up packaging value

Aluminum accounts for the main cost of two-piece cans, and its price fluctuations directly affect the profits of canning companies. Currently, leading companies and downstream customers mostly adjust prices on a quarterly basis, and the price transmission is relatively fast. At the same time, the industry continues to promote tank weight reduction to save the use of aluminum. There is still a gap between the average thickness of domestic metal cans compared to the international advanced level, and there is room for improvement in cost savings. At the same time, the trend of downstream high-end packaging is driving the evolution of packaging from “industrial containers” to “brand carriers”. As Gen Z gradually becomes the main consumer force, it has strong demand for consumer upgrades and high-end products (such as craft beer), and also pays more attention to product packaging forms and brand value expression, which is expected to drive metal packaging to obtain higher added value in product design, etc., and drive profit growth.

Actively deploy overseas production capacity and optimize business structure

Leading companies have been expanding overseas one after another in recent years. Among them, Southeast Asia, as an emerging market, has become a target for companies to concentrate overseas. Demand for metal beverage cans in Southeast Asia is growing steadily. Among them, beer cans account for a stable share. Vietnam, Thailand, and the Philippines are the countries that contribute the most to beer consumption. The three will account for 72% of total beer consumption in 2025. In addition, the overall beer canning rate in Southeast Asia is significantly higher than at home, providing good support for demand for metal beverage cans. It is estimated that in 2026-2028, the overall consumption of metal beverage cans in Southeast Asia will reach 279/284/29 billion cans. Considering that Southeast Asia's overall supply pattern is good and has advantages such as labor costs, the overseas gross margin of leading companies is superior to that of domestic companies. As the scale of overseas business expands, it is expected that their profit structure will improve.

Risk warning: Industry competition increases risks, raw material prices rise, overseas business development falls short of expectations, and risk of exchange rate fluctuations.