Japanese Copper Output Plans Total 776,000T in 1H, 4% Y/Y Up

Japanese copper production will increase by 4% to 776,000 tonnes in the first half of fiscal 2010 (April-September 2010) from the same period of fiscal 2009, according to the production plans by Japanese 8 major nonferrous smelters. The smelters ease the output reductions along the economic recovery while the operations are unlikely to reach full due to stagnant demand in domestic construction market and copper ore shortage. Zinc production will total 276,000 tonnes, increasing by 12%, and lead output will total 109,000 tonnes, increasing by 13%. The demand recovers from steel and automobile industries. Gold and silver production will also increase slightly due to the ore grade.

Japanese largest copper smelter, Pan Pacific Copper plans to produce electrolytic copper at 291,600 tonnes in 1H of F2010, decreasing by 2% from a year earlier. The production is scheduled to decrease by 3% to 202,300 tonnes at Saganoseki Smelter & Refinery and Hitachi Works while increase slightly to 89,300 tonnes at Hibi Kyodo Smelting. The production of sulphuric acid, a by-product, will decrease by 4% to 791,600 tonnes.

Copper output plan of DOWA Holdings is 56,970 tonnes in 1H, increasing by 30% from a year earlier. Onahama Smelting & Refining implemented output reduction in 1H of F2009 while the operation rate is expected to improve along the demand recovery. Zinc production is planned at 67,176 tonnes, increasing by 46%, but the operation rate would stay at 90%. Lead output will decrease by 4% to 5,952 tonnes due to ore grade.

Electrolytic copper production by 6 smelters including Sumitomo Metal Mining and Mitsubishi Materials is expected to increase in 1H compared with the same period of F2009. Domestic shipment of electric copper cables and copper alloy fabricated products has recovered to 80-90% of the level before Lehman Shock. The demand for these products is especially strong from China.

However, domestic demand for electrolytic copper may represent below 1 million tonnes per year for 2 fiscal years in a row. The annual demand became less than 1 million tonnes in F2009, for the first time in 34 years. Copper demand still maintains stagnant from the applications related to domestic construction market. Another factor is global shortage of copper ore so that Japanese smelters cannot enter full operations.