Rexam expects aluminium price exposure risk to fall

Rexam Plc (REX.L: Quote, Profile, Research), the world's biggest drinks-can maker, said on Tuesday it expected its risk of exposure to aluminium prices to fall as more customers agreed metal costs in advance with their suppliers. The packaging company earlier posted an expected fall in first-half underlying pre-tax profit to 98 million pounds ($199 million), citing higher aluminium costs and a weak dollar. Rexam said it was little affected by changes in aluminium prices in the Americas because major customers had agreed their costs in advance with their suppliers, leading to what they called a "cost pass through". "We expect the aluminium exposure risk to reduce over time," Rexam said in the results statement. The company said it was also negotiating with a growing number of big customers in Europe to opt for the pass through model. Rexam expected around half of metal needs would be on that basis in 2008. By end-2007 it said it would have re-negotiated a further one-third of its 2008 open European beverage can sales contracts and was confident of securing further price increases. The company said it had exposure to around 70,000 tonnes of aluminium in the second half of 2007 and forecast a price of $2,600-2,700 a tonne. The London Metal Exchange (LME) three-months aluminium price was last indicated at $2,761/65 a tonne.