Japan: Copper sheet strip demand surges; rapid recovery in automobile products

The demand for pure copper strip products is quickly picking up. Sales in the automobile sector are expected to rebound from this summer, with some manufacturers aiming for sales levels similar to FY2021 when there was high demand due to the coronavirus. However, semiconductor-related demand remained uncertain, and the recovery varies among manufacturers based on their product mix. There is a possibility that total domestic copper production in the second half of this fiscal year might surpass that of the second half of FY22, reaching around 130,000 t.

As reported by the Japan Copper Stretching Association, copper strip production in the first half of this fiscal year recorded a decline of 18% compared to the same period last year, totaling 113,177 tonnes. This figure was 15% lower than the association's March forecast. Despite a recovery in automobile-related sales during the summer, products linked to semiconductors and telecommunications equipment faced challenges. Mitsubishi Materials adjusted its annual sales forecast for the copper processing business, lowering it by 8% to JPY 427.4 billion due to decreased sales of copper strips and other copper products. Additionally, Kobe Steel has revised its production forecast for the fiscal year to 56,000 t, marking a decrease of 2,000 t from the previous estimate.

Conversely, demand in the latter half of the year could be rising more rapidly than anticipated by manufacturers. As of September, the Japan Copper Drawing Association anticipates demand to reach 123,800 t. While this marks an increase from the first half of the fiscal year, it falls short of the levels observed from the second half of FY20 to the second half of FY22, which ranged between 130,000 to 140,000 t.

Nevertheless, starting from around the summer, various automakers have conveyed that the production status of automotive parts is "currently at full capacity." Some companies have reported receiving more orders for certain products than their current production capacity can accommodate, expressing concerns about the potential tightening of supply and demand in the future.

Mitsubishi Materials anticipated monthly copper product sales of just under 11,000 tonnes in the second half of the year, comparable to the levels seen during the second half of financial year 2020 (FY20) and the first half of FY22. Kobe Steel plans to produce 32,000 t, surpassing the second half of FY21's record due to special demand from Covid-19. DOWA Metaltech expects monthly sales of 4,300 t, aligning with the second half of FY22. While individual companies vary, many are projected to surpass the second half of FY22 levels, suggesting a likelihood of production exceeding the approximately 130,000 t during that period.

While sales of semiconductors and telecommunications devices remained slow, there are indications of a recovery in smartphone demand, particularly for Korean and Chinese brands. Manufacturers suggested that inventory adjustments are finished, and sales are now driven by actual demand. Although there's no optimistic news for future demand, the prevailing sentiment is that the situation, while challenging for the rest of the fiscal year, has likely hit its lowest point. Manufacturers are not expecting further factors to push down their expectations.

Note: This article has been published in accordance with an article exchange agreement between Japan Metal Daily and SteelMint.