Japan Smelters and Fabricators to Conclude 2007 Copper Contracts

Japanese copper smelters and domestic copper users, including electric cable makers and copper alloy product makers, seem to conclude price negotiations on one-year purchase contracts for electrolytic copper shipped in January-December 2007 within next week. They seemed to agree on extra charge of several hundred yen per tonne, which is put on London Metal Exchange copper price with the premium. The smelters offered the extra charge of 1,000 yen per tonne to the copper fabricators. The fabricators insisted they cannot pass increasing cost price on their product prices. Consequently both smelters and fabricators compromised on setting the extra charge at several hundred yen. The premium price was unchanged for 2007 contracts from 2006, which is paid by domestic copper fabricators to domestic smelters in addition to LME copper price, because the export premium by CODELCO, Chile was set flat at US$ 115 per tonne for 2007 shipment. Japanese smelters tried to put extra charge of 1,000 yen per tonne other than the premium for 2007 contracts in order to cover increasing costs such for fuels, labors and distributions. However, the copper fabricators, especially electric cable makers, disapproved the extra charge. Electric cable makers were suffered from worse profitability in 2006 due to extremely high copper price and haven’t improved enough yet. As a result, the smelters decreased the extra charge offer by several hundred yen per tonne. The cable makers also compromised over the extra charge partly with some optional terms, such for volume and delivery. Extra charge seems to differ by each copper user.