JX Nippon anticipates demand to rebound in the next financial year

Daichi Yamaguchi, the managing director of JX Nippon Mining & Metals, discussed the challenging situation faced by the company's copper products business since the latter half of the previous fiscal year. The demand in their key telecommunications-related market has entered an adjustment phase, leading to a decline in plant utilisation rates. Despite the difficulties, the company anticipates demand to rebound in the upcoming fiscal year and projects steady growth in the medium to long term, primarily driven by the advancements in communication technology and the increasing adoption of electric vehicles. During the interview, they also addressed concerns about the current market environment, future outlook, and their business strategy to tackle the ongoing challenges.

What is your take about the current market environment?

The telecommunications market, our primary arena for copper products, is facing challenges due to global uncertainties, rising interest rates, inflation concerns, and geopolitical tensions. The Covid-19 pandemic boosted demand initially, but it has since cooled down, leading to a slowdown in markets worldwide, including China. Our factory operated at full capacity, but due to Covid-19 measures and uncertainties, the operation rate dropped to 70% in the latter half of the previous fiscal year. The current situation remains challenging, with minor improvements primarily in China.

What are the production results for the previous fiscal year and the outlook for the first half of this fiscal year?

During the first half of the previous fiscal year, our average monthly production of copper products was 3,300 tonnes. However, in the second half of that fiscal year, due to the challenging market conditions, the capacity utilisation rate dropped by 30%, resulting in a production of 2,300 t of wrought copper products. Looking ahead to the first half of this fiscal year, we anticipate a continuation of the lower production trend, with a forecast of 2,400 t of copper products.

What is the outlook for the future?

Our initial expectation was for demand to recover by the first half of FY23, but now we anticipate that it may not happen within that fiscal year. Despite the short-term challenges, we remain optimistic about the future due to the ongoing advancements in next-generation mobile communication systems, digitalisation, and the electrification of automobiles. As a result, we firmly believe that the market scale for copper and copper products will continue to expand in the medium to long term. Despite market challenges, we remain optimistic. The advanced Kurami plant offers an opportunity for comprehensive maintenance. Lowering furnace temperature, prototyping new products, and employee training will take time. Human resource development is a priority, requiring 2-3 years. We focus on safety and environmental measures to enhance operations.

How will they respond to the expanding market?

The operation of the new copper foil rolling mill in Hitachi City will begin in April next year, and some of the equipment at the new Hitachinaka plant will begin operation at the end of FY25.

What products are they focusing on?

In our functional materials business, copper wrought products play a significant role. Currently, our main products are semiconductors' targets and rolled copper foil. As part of our future plans, we aim to develop titanium copper as a third pillar. Titanium copper has comparable strength to beryllium copper and produces 180-200 t during busy times and around 130 t even in a slower market. We're already making strides with C1995, a stronger alternative to C1990, and intend to expand its use in smartphones. Additionally, we're focusing on rolled copper foil for folding smartphones and Corson alloy products with high strength and conductivity.

This article has been published under an exchange agreement between Japan Metal Daily and SteelMint.