Weak Rebar Price around Tokyo

Fujikura Dia Cable (FDC), Japanese secondly largest sales company of building cables jointly invested by Fujikura and Mitsubishi Cable Industries, posted 14% year-on-year lower shipment of building cables in copper volume for the first half of fiscal 2008 (Apr08-Sep08). FDC aims to sustain the annual cable shipment as much as F2007 by increasing the sales volume by year-on-year 14% in 2H of F2008. However, Koji Nashiro, president of FDC, said the demand situation is very severe in fact. He said FDC would be suffered from 3 negative impacts in 2H, which are price down of copper ingot, decline of cable shipment volume and cost expansion for substantial materials.FDC’s cable shipment represented year-on-year decrease almost through 6 months of 1H, although large-lot shipment started for very big plants of flat panel televisions around Osaka, Japan in July. The demand was especially weak from building cable wholesalers.Large-lot shipment for flat panel TV plants in West Japan is expected to continue in 2H. However, there are few large-lot shipment schedules in East Japan during 2H and wholesalers’ demand seems not to recover soon.FDC’s annual cable shipment decreased by 8% in F2007 compared with F2006 due to confusions after the start of new Japanese building standard law. At the beginning of F2008, the firm aimed to recover the shipment volume as much as F2006. The firm revised down the annual target with the sales result in 1H.FDC is also suffered from lowering copper ingot price. The profitability turned worse because of the price gap between the current ingot price and the firm’s copper hedging price for large-lot contracts, or between the low selling price for cable wholesalers and the firm’s expensive inventory price. The loss is increasing when domestic copper ingot price dropped down in September and October.Additionally FDC’s cable purchasing cost increased in October to reflect upsurge of insulating and sheathing materials such as vinyl chloride and polyethylene. FDC purchases building cables from its parent companies. FDC aims to raise its cable selling price by average 5% in 2H of F2008 to cover higher cost price. FDC has offered the price hike by 5% since 1H of F2008 but the customers disapproved when domestic construction market was weak and cable supply was loose.