Ohki Brass & Copper Increases Billet Stock before TEPCO’s Hike

Tokyo headed major brass bar maker, Ohki Brass & Copper plans to increase billet inventory by about 30% within March. The firm will increase intermediate material production before TEPCO’s electricity charge hike in April and relieve higher production cost in melting and casting processes.

Ohki’s brass bar production is 10-15% lower than the annual output plan for 2012. Brass bar order decreased since autumn of 2011. However, the firm decided to increase operating days in March and to roll up billet inventory since melting and casting use electricity the most in all production processes.

Ohki’s normal inventory level is slightly higher than 1 month of consumption while the firm plans to increase billet inventory to 1.4-1.5 months of consumption. The firm will consume surplus billets gradually before the regular furnace maintenance in summer.

Ohki is negotiating with TEPCO to reduce the range of electricity charge hike in and after April. Ohki estimates the non-consolidated electricity cost would increase by several ten millions yen per year. At the same time, gas charge increased by more than 20% in March. Ohki will bear cost up for electricity and gas charges by total 40 million yen per year or more.

Meanwhile, Ohki plans annual capital expenditure at approximately 300 million yen for 2012 mainly for renewals of aged facilities. The firm will replace some of pickling machines, milling machines and straightening machines at total 50-60 million yen.