Ailing Japan Brass Bar Makers under High Cost

Brass bar makers are forced to increase the selling price despite of lower copper price when copper ingot price doubled in 2 years and brass bar makers have to use more expensive electrolytic zinc compared with brass turning scrap to make cadmium-free bar more. The bar makers try to increase the selling price to meet the higher demand along with reproduction. Brass bar makers increased the rolling charge twice in 2006 due to surging raw materials cost. Japanese official copper ingot price hit 1 million yen per tonne in May compared with 380,000 yen in the beginning of 2005. The bar makers are suffered from the higher cost for production loss materials when the loss represented 50-60% of their rolling charge in spring of 2006. The higher copper price suffered brass bar makers in higher working capital for higher inventory value and account receivables. The tighter cash flow damaged small sized makers along with higher zinc ingot price, which reached record 581,000 yen per tonne in late 2006. The brass bar makers increased the rolling charge by total 20 yen per kilogram last year. However, their profitability is still limited after they competed through rolling charge reduction in years. They have no additional capital to renew production equipments. They couldn’t increase the rolling charge in 2007 due to drop of copper and zinc prices. However, the brass bar makers have to increase the rolling charge to keep the production base and to meet the higher demand in longer term. An industry source said the makers need 100 yen per kg of rolling charge when they increase the consumption of high priced electrolytic zinc to make cadmium-free brass bar.