Furukawa Electric to Raise Aluminium Blank Output and Price

Furukawa Electric expands output capacity of aluminium blanks by about 30% within fiscal 2007 ending March 2008, which is used as substrates for computer magnetic discs. The firm plans to expand the output capacity to 36 million aluminium blanks per month from current 28 million blanks at Nikko works in Tochigi Prefecture, Japan by automation of productive lines after this summer. The firm expects average production of 30 million aluminium blanks per month in fiscal 2007 when hard disc demand maintains steady for desktop personal computers and computer servers.At the same time, Furukawa Electric aims to raise its selling price of aluminium blank by 5% or more from April shipment.Furukawa Electric has produced 25 million aluminium blanks per month averagely in fiscal 2006, increasing by about 25% from fiscal 2005. To meet increasing demand, the firm raised output capacity at Nikko works to 28 million aluminium blanks per month in 2006 from 23 million blanks per month in 2005 by resumption of idle lines. Nikko works has kept operating rate at over 90% through fiscal 2006 even after the resumption.Furukawa Electric expects aluminium blank demand grows by 10-20% in fiscal 2007 compared with fiscal 2006. Then the firm plans to automate some productive processes in the resumed lines, such as the stacking process, with several hundred million yen of capital expenditure this summer and raise the output capacity to 36 million aluminium blanks per month within fiscal 2007. The firm has the next choice to establish another productive line for aluminium blanks at Nikko in or after fiscal 2008 along the demand condition. As to the price hike, Furukawa Electric aims to pass increasing material costs on the selling price, mainly for 99.99% high-purity aluminium ingot. Another background of the hike is that aluminium blanks tend to become thicker recently due to higher storage density of computer magnetic disks.