copper hits all-time high

Copper hits all-time high

TOKYO - Amid growing global demand and persistent supply concerns, Japan's domestic benchmark price of copper has hit an all-time high, breaking the record for the first time in nearly 32 years.

The recent uptrend is hitting manufacturers of copper products hard, with some unable to fully pass higher copper prices on to their customers.

Nippon Mining & Metals lifted its copper price - widely used as the industry's yardstick - to a record 910,000 yen (US$7,950) per ton Thursday, up 70,000 yen on the day, surpassing the 890,000



yen record marked in May 1974. Three-month copper futures rose to 7,300 dollars per ton Wednesday on the London Metal Exchange.

Copper prices are soaring because global demand for the metal has increased. Yet supply is not keeping up with demand, as it has suffered a series of labor disputes and mining accidents in Indonesia and Central and South America. In addition, the influx of speculative funds into the commodity market is exerting upward pressure.

Surges in copper prices are dealing a severe blow to manufacturers of electrical wire, which are responsible for roughly 60% of Japan's total annual copper ingot consumption of 1.2 million tons. They have been able to pass copper price increases on to their customers in the public sector and the power industry, but are having a hard time doing so with construction companies, with which prices have to be negotiated separately.

"It is difficult to fully pass the burden on to these clients," an official at Furukawa Electric said.

Matsushia Electric Works and others have won agreement from some of their customers to raise the prices of processed copper products used for wiring of printed circuit boards by about 15%. In turn, producers of these boards are negotiating price hikes with consumer electronics manufacturers.

"If negotiations fail, our pretax profit will drop by some 10%," a CMK official said.

Makers of air conditioners are also scrambling to raise prices to reflect higher copper prices. With the prices of copper wire used to enhance air conditioners' cooling function rising, Daikin Industries, Mitsubishi Electric and others have lifted prices of commercial-use air conditioners since 2004.

But copper wire prices have jumped 30% so far this year, increasing the burden on these air conditioner manufacturers.

(Asia Pulse/Nikkei)