Copper Tube Makers Concerned with Soaring Copper Ingot Price

Makers of plastic covered copper tube and copper tube for construction are concerned with the soar of the copper ingot price. Makers have negotiated with their users about the fixed price when the copper ingot price fluctuated, and secured the stable margin. However, due to the jump of the copper ingot price than anticipated, makers cannot reflect the cost up enough on their selling prices yet. Makers might expect the new price system if they continue not to cover the margin enough, such as the surcharge system by the copper ingot price. The production of plastic covered copper tube and copper tube for construction represents about 5% of whole copper tube’s production.There are 2 price systems for copper alloy products. One is the fixed price system and the other is the surcharge system which is interlocked with the copper ingot price. In the former system, copper alloy products maker and the users negotiate about the fixed price when the copper ingot price changed. In the latter, both makers and users agree with the automatic price shift following the price ingot price, mostly Japanese official copper price of the previous month. The fixed price system is adopted for plastic covered copper tube and copper tube for construction for about 20 years, when it takes several years from the order reception to the delivery, while the surcharge system is adopted for most copper alloy products.Copper price soared at overseas market since the second half of 2004 due to Chinese demand expansion and the inflow of speculative fund. Japanese official copper ingot price also increased sharply, which marked the high price of 620,000 yen per tonne on Thursday. Additionally the production cost and the material cost but copper also increasing due to the high crude oil price at copper tube makers.