KMCT and Large-Lot Copper Tube Users to Agree 10% Higher Rolling Charge

Japanese largest copper tube supplier, Kobelco & Materials Copper Tube (KMCT) is closing price negotiations with large-lot copper tube users. The firm has offered the rolling charge hike against large-lot users since autumn of 2011. The users are likely to accept KMCT’s rolling charge hike by around 10% when Japanese copper tube makers have shrunk production capacity due to the business optimization while copper tube makers are concerned on production cost upsurge such for electricity charge.

Japanese copper tube makers have suffered from low rolling charges. They launched the hike announcement in 2011 when domestic copper supply was tight against the demand. They started the talks with domestic small-lot customers, mainly wholesalers, in April-May 2011 and almost achieved the hike in 3Q 2011. Then KMCT offered the hike to large-lot users, mainly air conditioner makers.

Hitachi Cable decided to withdraw from domestic copper tube production until March 2012. Furukawa Electric currently shrank domestic copper tube production, too. Copper tube supply capacity largely downsizes in Japan and over-competition situation settles down. Thus copper tube makers became able to offer rolling charge hike.

At the same time, KMCT estimates production cost will increase by 200 million yen per year at Hatano plant in Kanagawa, Japan due to electricity charge hike of Tokyo Electric Power Co., and fuel gas price upsurge. KMCT didn’t involve these cost-up factors into the current rolling charge hike but the conditions facilitated copper tube users’ approvals for the price hike.

KMCT has absorbed negative impact of low rolling charge by self cost cut efforts these years. However, KMCT’s president Hideo Ohgi said they cannot keep stable supply any more only by self cost cut measures. KMCT shows strong stances to improve the rolling charge to the sustainable level.