Severe Business Condition for Japan Smelters’ Electronic Materials

Japanese major 7 nonferrous smelters expect severe business condition for the electronic materials in fiscal 2009 started April when the demand keeps very slow since late 2008. The units of Sumitomo Metal Mining, Mitsui Mining & Smelting and Nippon Mining Holdings posted operating loss in fiscal 2008 partly due to inventory valuation loss for metals. Sumitomo Metal Mining expects operating loss and Mitsubishi Materials expects lower operating profit in fiscal 2009.

Sumitomo Metal Mining’s electronics & advanced materials unit posted 10.2 billion yen of operating loss for fiscal 2008 due to very slow demand since late 2008. Electronic materials unit of Mitsui Mining & Smelting and Nippon Mining & Metals also posted more than 10 billion yen of operating loss while they expected around 10 billion yen of profit as of late 2008.

Electronic materials demand is improving recently from bottom in January-March. Especially, liquid crystal panel demand is firm when the makers in South Korea and Taiwan keep full capacity operations, according to Japanese trading firm. Related industry including indium tin oxide target material makers is also in full capacity operations. Electrolytic copper foil demand is also recovering when the demand recovers for printed circuit board for appliances, mobile devices and electronics components of automobile.

However, Japanese smelters are still cautious for economy condition. Some industry officials expect the demand could decrease again when the real demand is still slow while the apparent demand improves after inventory adjustment through the supply chain.