Furukawa Electric to Link Copper Tube Price with Copper Ingot

Furukawa Electric changed the fixed price system for building piping and water supply copper tube to new mechanism to reflect change of official copper ingot price since June shipment. The firm decided to change the pricing when the firm couldn’t cover the surging copper cost by the own effort. Another copper tube makers, Sumitomo Light Metal Industries and Kobelco & Materials Copper Tube already shifted to copper ingot linked price system. Furukawa Electric increased the fixed price of copper tube 4 times since the beginning of 2005 to cover higher cost of copper ingot, which started to increase since late 2004, and oil related materials. The firm sought 15-20% price hike to the users in the 4th hike in April to cover higher copper price as of January-February. However, the copper ingot price surged after April. The domestic official copper price, which is indicator for rolled copper price, reached 1 million yen per tonne on May 15 from 680,000 yen in early April. The price decreased in mid-June due to plunge of offshore copper price under higher US dollar rate and drop of gold price. However, the domestic copper ingot price rebounded to 870,000 yen on June 27 increasing by around 27% from early April. Furukawa Electric decided to change the price mechanism for copper tube to reflect change of copper ingot price when the fixed price system cannot cover surging copper price immediately and the own effort to absorb higher cost failed to improve the profitability. Furukawa Electric’s copper tube products with fixed price system are used mainly for building piping to supply water and hot water. The products represent around 10% of Furukawa Electric’ copper tube output.