Japan Copper Smelters Settle 2010 Price Talk with Domestic Major Buyers

Japanese copper smelters finished negotiation with domestic long term contract copper ingot buyers including electric wire and rolled copper makers to increase the premium price on ingot price of London Metal Exchange by 900-1,000 yen per tonne for 2010 from 2009. The volume is in line with shipment in and after July 2009 as the demand recovers.

Corporacion Nacional del Cobre de Chile (CODELCO) already increased the premium by US$ 10 per tonne or 15% to CIF US$ 75 to Yokohama for 2010 from 2009. Japanese smelters followed the move to increase the premium to near 7,000 yen per tonne. The buyers already showed intention to accept the higher premium at the negotiation started in earlier the year.

The buyers, however, cannot see how much ingot they need in and after April when the domestic copper demand decreased to less than 1 million tonnes in 2009 for the first time in 34 years. The demand recovers around 80% level of the peak in 2008 but the construction demand is still very low level and a smelter official expects the demand will be less than 1 million tonnes for 2010. The unforeseeable demand condition resulted in the long negotiation. The volume was settled at around 80% of 2008 level.

Some buyers increased the contract base purchase volume for 2010 while they reduce the spot purchase after they couldn’t secure enough volume temporarily in 2009 due to strong purchase by Chinese buyers.

The long term contract supply was only for April-December 2009 while the smelters shipped the ingot at spot basis in January-March 2009 when the buyers reduced the operation to less than 50% of the capacity due to major demand drop. With the recovering demand, the contract based supply gets normalize for January-December.