Japan Electric Cable Makers’ Loss with Copper Price Drop

Japanese electric wire and cable makers are concerned that they could be suffered from the difference between higher copper ingot cost price and lower selling prices when Japanese official copper ingot price, the indicator for domestic electric wire and cable prices, continued to decline. Most of the makers purchase copper for electric wire and cable at the prices indicated by monthly averaged price at London Metal Exchange (LME) or averaged Japanese official price in the previous month. The makers soon start shipment of the products for which the most expensive copper was used, while the selling prices of most products fluctuate along Japanese official copper price. Consequently the makers will be forced to sell higher cost products at lower prices unless Japanese official copper price rebounds.Most of Japanese major electric cable makers seem to purchase copper every month at the prices indicated by averaged LME copper price in the previous or present month. Minor makers purchase copper drawing wire from major makers since the minors do not produce copper drawing wire by themselves. The purchasing prices seem to be indicated by averaged Japanese official copper price in the previous month in most cases.Monthly average of LME copper spot price was US$ 6,388 per tonne at settlement in April, which increased to 1.25 times from March, and averaged US$ 8,046 in May, 1.58 times from March. Japanese official copper ingot price followed the trend of LME copper. The monthly averaged price reached 783,500 yen per tonne in April and 968,800 yen in May.Electric cables usually take 1-2 months of productive lead time from materials arrival to products shipment at makers. Overseas and domestic copper prices were at the peak in the end of April toward May. Japanese electric cable makers will ship the products during next 1-2 months for which the extremely expensive copper was used.