Sumitomo Light Metals Increases Local Material Buy in China and Malaysia

Sumitomo Light Metal Industries will increase local procurement of copper base tube at copper tube processing sites in Guangzhou, China and Malaysia by March 2011 at earliest. These sites now import base tube from Sumitomo Light Metals’ copper tube plant in Aichi, Japan and process base tube into grooved tube for air conditioners, supplying to Japanese air conditioner makers’ local plants. Sumitomo Light Metals considers even higher local procurement ratio in response to local demand conditions for copper tube.

Sumitomo Light Metals has researched and investigated local suppliers’ product quality and cost. The investigation covers Japanese copper tube makers’ offshore plants and local copper tube makers. The firm may adopt local makers’ base tube dependent on their quality and price. In this case, Sumitomo Light Metals eyes capital investment in the base tube supplier or cooperative material procurement with other Japanese makers. The firm also examines establishment of a new plant by joint investment with other Japanese makers.

In China, imported base tubes applied to exporting air conditioners are based. Sumitomo Light Metals can raise operating rate of Aichi plant. However, in the case to apply imported base tubes to air conditioners sold in Chinese domestic market, these base tubes are not bonded. In recent years, copper tube sales rate for domestic air conditioners has risen and cost advantage has weakened.