Guotai Haitong Securities Co., Ltd. has released a research report stating that the growth in domestic demand for two-piece cans is primarily driven by the increasing canning rate in the beer industry. Projections estimate that domestic demand for two-piece cans could reach 67.8 billion units by 2027. The firm believes that the current profit recovery will be stronger than in previous cycles, with leading companies holding significant market share and poised to fully realize their profit potential. The overall supply structure for two-piece cans in China is improving. Leading firms command high market shares and possess strong profit elasticity. Rising can prices combined with the expansion of production capacity overseas are expected to continuously enhance profitability. The key viewpoints from Guotai Haitong Securities are outlined below.

Beer Canning Rate Increase Fuels Two-Piece Can Demand

Beer is the dominant downstream application for two-piece cans, accounting for 59% of demand. In 2025, China's beer canning rate was only 31.5%, significantly lower than the rates exceeding 58% seen in developed countries like the UK, US, and Japan, indicating substantial room for growth. As the beer market enters a phase of competition for market share, the increase in domestic demand for two-piece cans is being propelled by the rising beer canning rate. Estimates suggest domestic demand for two-piece cans could reach 67.8 billion units by 2027.

Improved Supply-Demand Dynamics Enhance Profit Potential for Leaders

According to calculations, China's total two-piece can production in 2025 is approximately 74.6 billion units, indicating that overcapacity persists. However, with a reduction in new capacity additions across the industry and leading companies relocating some production overseas, the supply structure is expected to improve further, moving towards a better supply-demand balance. Driven by three major trends—leading can makers' shared focus on protecting profits, deeper integration between can manufacturers and downstream breweries, and downstream beer companies' push for product premiumization—the firm believes the current profit recovery will be more robust than before. Leading companies, with their high market shares, are well-positioned to fully unleash their profit elasticity.

Lightweighting Aids Cost Reduction, Premiumization Drives Packaging Value

Aluminum constitutes the primary cost component for two-piece cans, and its price fluctuations directly impact can manufacturers' profits. Currently, leading companies typically adjust prices with downstream customers on a quarterly basis, allowing for relatively swift price transmission. Concurrently, the industry continues to promote can lightweighting to reduce aluminum usage. The average can wall thickness in China still lags behind international advanced levels, suggesting potential for further cost savings. Meanwhile, the trend towards premiumization in downstream markets is transforming packaging from an "industrial container" into a "brand carrier." As Generation Z becomes a major consumer force, their strong demand for consumption upgrades and premium products (such as craft beer), coupled with a greater focus on product packaging and brand value expression, is expected to enable metal packaging to capture higher added value through product design and other aspects, thereby driving profit growth.

Strategic Overseas Capacity Expansion Optimizes Business Structure

Leading companies have been actively expanding their overseas presence in recent years, with Southeast Asia emerging as a key target market for this outward expansion. Demand for metal beverage cans in Southeast Asia is growing steadily, with beer cans maintaining a stable share. Vietnam, Thailand, and the Philippines are the largest contributors to beer consumption in the region, collectively accounting for 72% of consumption in 2025. Furthermore, the overall beer canning rate in Southeast Asia is significantly higher than in China, providing solid support for metal beverage can demand. It is projected that total metal beverage can consumption in Southeast Asia will reach 27.9, 28.4, and 29 billion units from 2026 to 2028. Given the region's favorable overall supply structure and advantages such as labor costs, leading companies' overseas operations often achieve higher gross margins than their domestic ones. As the scale of overseas business expands, this is expected to improve their overall profit structure.

Risk factors include heightened industry competition, rising raw material prices, slower-than-expected progress in overseas business operations, and foreign exchange rate volatility.