Japanese copper smelters will likely extend curbs on copper production into the next financial year as there is no sign of a recovery in the autos sector or other key customers, Japan's mining and smelter industry group said on Wednesday.
Japan's smelters have cut production by about 10 percent since the start of the year, as manufacturers including automakers slash output in the face of tumbling demand.
From next week, Japanese copper smelters are due to start announcing production plans for the first half of the new financial year that starts in April.
Pan Pacific Copper Co Ltd., the copper smelting unit of Nippon Mining & Metals Co Ltd, has already said it would continue to cut copper output by 10 percent for the new financial year.
Industry sources have said it may take several more months at least for domestic demand to pick up.
Japan Mining Industry Association Chairman Nobuyoshi Soma told reporters that the industry was watching closely the fortunes of the automobile industry, a major consumer of copper and other metals.
"I think the most important thing is for us to see a recovery in the automobile industry," he said.
Demand for automobiles, however, is expected to remain in a slump, suggesting that consumption for the industrial metal is unlikely to recover soon either.
The Japan Automobile Manufacturers Association (JAMA) on Tuesday forecast the lowest domestic vehicle sales in 32 years for the coming financial year.
One of the few bright news for the Japanese industry has been an increase in exports of refined copper to China, the world's top consumer of the metal, with hopes pinned on Beijing's 4 trillion yuan stimulus package aimed at aiding economic recovery.
Japan's exports of refined copper in January rose 74.7 percent from a year earlier to 59,602 tonnes, with China accounting for over 80 percent of the purchase, official data shows.
Industry sources, however, have expressed doubts about the strength of Chinese buying and whether it stemmed from real demand.
They note that a lot of the purchase has been done by China's State Reserves Bureau, which has taken advantage of the decline in price to step up buying of copper to build up the nation's reserves.
Export data for February will be available on Monday.
The price of copper MCU3 has recovered to about $4,000 per tonne on the London Metal Exchange, but it is still less than half its all-time peak over $8,900 hit in July 2008.
Source: Reuters
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