Sumiden Hitachi Cable to Reduce Electric Wire Stock

Sumiden Hitachi Cable, which is joint sales force of Hitachi Cable, Sumitomo Electric Industries and Tatsuta Electric Wire & Cable to market electric wire for construction, tries to reduce electric wire inventory toward the fiscal year end in March. Operation of the 3 groups’ 9 companies decreases to around 60% of the peak. However, Sumiden Hitachi Cable reduces the order for the plants to keep their operation at the level. The firm tries to improve the efficiency when the demand is very slow and low copper price expands the inventory valuation loss.

The demand of construction electric wire was peak in 2005-2006. The production level of 9 companies belonged to Hitachi Cable, Sumitomo Electric Industries and Tatsuta Electric Wire & Cable groups decreased to around 80% of the peak in April-September 2008 and decreases to around 60% now. Sumiden Hitachi Cable sees the plants should conduct some job cut if the production level would decrease to less than 60%.

The domestic demand, which exceeded monthly 20,000 tonnes in fiscal 2006 ending March 2007, decreased to around 17,500 tonnes for cross linked polyethylene insulated cable (CV), vinyl insulated internal wires (IV) and polyvinyl chloride insulated and sheathed control cable (CVV) in November. The demand is estimated to be around 17,000 tonnes in December. Sumiden Hitachi Cable expects the monthly demand could decrease to around 15,000 tonnes in April-June period.

Electric wire makers hold high priced inventory including materials in process and products. The valuation loss increases when copper ingot price decreased to 330,000 yen per tonne from 870,000 yen in early September. They try to reduce the inventory to minimize the inventory loss.