Japan Copper Products Dealers’ Pinch with Copper Volatility

Japanese rolled copper dealers are in difficulty. Copper ingot price decreased and the dealers’ inventory, which was purchased at higher price, depreciated. However, the dealers of brass bar, of which the price is still high with historical high copper ingot, are suffered from higher inventory cost after they almost sold out cheaper inventory, which they purchased in the spring. The dealers, for which stable supply ability is credit capability, are in critical period when they have to have more inventory including cadmium less brass bar and other environmental friendly products. Domestic supply of brass turning scrap, which is raw material of brass bar, was very short and still shortage when the scrap shipping increased for higher priced export than domestic price. Brass bar makers’ brass scrap purchase price reached 723 yen per kilogram in May when official copper ingot price hit record 1 million yen per tonne though the scrap purchase price was 317 yen per kg in the beginning of the year. The scrap price increase was 128% much higher than 72% of copper ingot price increase. The scrap price is 638 yen per kg on Friday, which is still more than double of the year-start level, despite of the decrease along with copper ingot price down. Market price of brass bar, which reflects brass turning scrap price, increased to 780 yen per kg from 420 yen 6 months ago for free cutting round bar with 10 millimeters diameter at dealers’ selling price without freight. Many brass bar dealers built the inventory with expectation of higher price in January-March when copper ingot price started to surge. However, they almost sold out the cheaper inventory at the timing of peaked out copper price. They are forced to higher risk under expectation of potential lower price when they restock materials at current higher price. Some brass bar dealers apparently have inventory at more than half of normal level and increase the purchase from dealers to cover the fewer inventory. A dealer source said some dealers would consider exiting from the market by selling the all inventory when they cannot make money.