KMCT to Expand Copper Tube Output by 25% in Thailand

Kobelco & Materials Copper Tube, a copper tube manufacturing joint venture between Kobe Steel and Mitsubishi Materials, will expand production capacity of Thai plant with capital expenditure at approximately 1 billion yen. The capacity will be raised to 30,000 tonnes per year by the end of 2009, up by 25% from current 24,000 tonnes. Copper tubes are supplied mainly to Japanese air conditioner makers.Kobelco & Materials Copper Tube (Thailand), a 100% subsidiary of Kobelco & Materials Copper Tube, will introduce several draw benches and groove cutting machines for output expansion. Along the plan, the subsidiary started construction of a new factory building in February 2008.Air conditioner is the largest application of copper tube, which represents about 70% of total copper tube demand. Japanese air conditioner makers have shifted to “an out-in production system”in recent years. The system is that air conditioner makers manufacture half-finished products at overseas and brings them to Japan. Consequently domestic demand for copper tube has gradually shrunk in Japan.On the other hand, penetration of home air conditioner is less than 20% in Europe, remarkably lower than 90% in Japan. Japanese air conditioner makers are expecting demand growth and reinforcing the sales activities in Europe. Demand could also increase for copper tubes.Kobelco & Materials Copper Tube aims to follow the demand increase from offshore air conditioner markets through Thai expansion. At another offshore plant, Kobelco & Materials Copper Tube (Malaysia), the firm plans to raise output ratio of high-value-added products, such as capillary tube, and define separate roles for Thai and Malaysian plants.