Earnings pressure from falling copper prices

「Copper, our Group’s core product, remained at high levels, with the average LME cash price during the period rising 27.8% year on year.」

「Against this external backdrop, copper, our Group’s core product, experienced such sharp price movements that stable procurement and sales became difficult.」

「Against this external backdrop, the price of copper, our Group’s core product, reached record highs in May, with the average LME cash copper price at $10,129 and the copper reference price at ¥1,750/kg. It then plunged by the end of August to $9,215 and ¥1,370/kg, respectively, resulting in highly volatile market conditions.」

「In particular, the average LME cash copper price reached $10,129 in May, while the copper reference price temporarily reached ¥1,750/kg, with the weaker yen also contributing, and both set record highs.」

「Against this backdrop, although the average London Metal Exchange copper price during the period was down 10.4% year on year, the yen-denominated average price during the period rose 1.9% as the exchange rate moved 13.7% in favor of the dollar.」

「Against this external backdrop, the price of copper, our Group’s core product, remained firm from the beginning of the period and reached $9,082 in the London Metal Exchange copper 3-month futures contract in the middle of the third quarter. However, concerns spread through financial markets over the U.S. debt ceiling issue, and the price fell to $7,910 in May, its lowest level of the year, declining below $8,000 for the first time in 6 months.」

「Although the average yen-denominated cash copper price during the period rose 4.2% year on year, trading margins narrowed due to the impact of the stronger yen described above and tight supply and demand, among other factors.」

「The price of copper, our Group’s core product, rose gradually after plunging at the previous fiscal year-end as positive and negative factors offset each other, and the average yen-denominated copper price during the period rose 3.9% year on year.」

「Although copper prices, which affect the prices of our core products, remained firm at high levels, they plunged from the third quarter onward due to deteriorating real estate market conditions in China, the impact of the zero-COVID policy, monetary tightening by major central banks, and higher energy prices resulting from sanctions on Russia. The London Metal Exchange copper 3-month futures price reached $6,955, its lowest level since 13 November 2020.」

「The price of copper, our Group’s core product, remained firm at high levels as concerns about tight supply and an economic slowdown offset each other. It reached $10,845 in the London Metal Exchange copper 3-month futures contract, setting a record high for the first time since 10 May 2021, while the average yen-denominated cash price during the period rose 32.6% year on year.」

「In addition, the price of copper, our Group’s core product, rose sharply by 41.1% quarter on quarter on an average yen-denominated cash price basis as it remained at high levels against favorable supply and demand conditions resulting from tight supply.」

「Against this external backdrop, the price of copper, our Group’s core product, moved sideways at high levels as positive and negative factors offset each other. Inflation concerns driven by expectations of an economic recovery and growing speculation, mainly in the United States, about tapering, or reducing quantitative easing, were offset by supply constraints and lower production caused by the renewed spread of COVID-19. As a result, the average yen-denominated copper price during the period was up 50.8% year on year,」

「Copper prices maintained an upward trend from the beginning of the period due to the shift toward a greener economy and supply constraints, reaching a record high of $10,747.5 in May in the London Metal Exchange copper 3-month futures contract, the highest level since February 2011. Prices subsequently moved into a slight correction amid speculation about a reduction in quantitative easing in the United States, but stood at $9,535 at the fiscal year-end, up 42.9% from the previous fiscal year-end, and market conditions remained favorable throughout the fiscal year.」

「The price of copper, our Group’s core product, reached $10,747.5 in early May in the London Metal Exchange copper 3-month futures contract, setting a record high for the first time since 15 February 2011, against favorable supply and demand conditions driven by expectations of economic recovery centered on the United States and China and of copper demand from the green revolution. The average yen-denominated cash price during the period also rose 41.6% year on year.」

「Against this external backdrop, sales volumes exceeded those of the same quarter of the previous year, while copper prices, our Group’s core product, maintained an upward trend throughout the quarter due to economic stimulus measures and a strong recovery in the Chinese economy. The price reached its highest level since August 2011 in late February, and the average yen-denominated cash price during the period rose 22.3% year on year, substantially improving trading margins.」

「Against this external backdrop, the price of copper, our Group’s core product, followed an upward trend toward the end of the quarter against favorable supply and demand conditions resulting from economic stimulus measures in major countries and signs of an economic recovery in China. As the average yen-denominated copper price during the period rose 14.8% year on year, trading margins improved substantially.」

「In the third quarter, the London Metal Exchange copper 3-month futures price fell to $4,371, its lowest level in 4 years and 2 months. Subsequently, supply concerns increased due to expectations of policy measures and mine closures caused by COVID-19, triggering a sharp rebound. By the fiscal year-end, the price had reached $6,709.5, its highest level in 2 years and 2 months, and market conditions improved substantially.」

「In terms of profits, although the average yen-denominated cash copper price during the period fell 11.5% year on year due to the deterioration in the global economy caused by COVID-19 after the start of the third quarter, we remained profitable in the nine-month consolidated period through the third quarter due to stronger inventory management during the gradual upswing through the second quarter and our ability to maintain stable procurement prices.」

「In terms of profits, although the average yen-denominated cash copper price during the period was down 6.7% year on year, it rose gradually from the beginning of the period through the latter half against growing expectations of an improvement in the global economy, as described above. In addition, stronger inventory management enabled us to maintain stable procurement prices, resulting in solid profitability.」

「Our sales volumes declined for both ingots, due to lower demand for raw materials used in water supply equipment, and scrap, due to lower scrap demand resulting from furnace repairs at smelting companies and the effects of electrolytic copper and return materials. However, after the price of copper, our core product, reached a low of $5,518 at the beginning of the period in the London Metal Exchange copper 3-month futures price, its lowest level since May 2017, it followed a gradual upward trend against expectations of an improved external environment, substantially improving trading margins. However, the average yen-denominated copper price during the period was down 9.7% year on year, among other factors,」

「Against this external backdrop, total sales volumes increased, as ingot volumes declined slightly year on year while scrap volumes increased. However, the earnings environment became challenging because copper prices, our core product, fell 8.5% year on year due to protectionist moves by the United States, including the U.S.-China trade friction, and because scrap supply and demand tightened as a result of lower prices.」

「Copper prices, which affect the prices of our Group’s core products, remained soft.」

「However, the price of copper, our core product, stagnated due to uncertainty in the external environment,」

「However, there was no major change in the copper supply-demand environment. In the scrap market, there was no sense of oversupply due to tighter environmental regulations in China and stricter application of the Basel Law in Japan, among other factors. Given the resilience of the U.S. economy and China’s early economic stimulus measures, we expect supply and demand conditions to remain firm.」

「Copper prices, which affect the prices of our Group’s core products, rose at the beginning of the period due to China’s environmental regulations and measures to reduce excess production capacity, among other factors, and then remained at high levels.」

「Copper prices, which affect the prices of the Group's principal products, remained firm partly due to China's environmental regulations and measures to reduce excess production capacity.」

「Although the price of copper, the Group's principal product, went through periods of volatility due to geopolitical risks, uncertainty over the Chinese economy and political instability in Europe and the US, it remained at higher-than-expected levels.」

「Copper prices rose sharply in November and then softened slightly, but have remained at high levels.」

「Mr. Trump was elected the new US president in November. His pledge to pursue economic expansion through fiscal measures, including infrastructure investment and tax cuts, led to a stronger dollar and a sharp rise in copper prices, substantially improving margins and resulting in strong performance.」

「Speculation about US interest-rate hikes and Mr. Trump's election as president strengthened expectations for economic expansion driven by fiscal stimulus, including infrastructure investment and tax cuts, resulting in a stronger dollar and a sharp rise in copper prices.」

「The price of copper, the Group's principal product, reached its lowest level since July 2009 based on the three-month copper futures price on the London Metal Exchange, and followed a declining trend throughout the period, rising at the beginning and falling by the end.」

「Against the backdrop of these global economic trends, copper prices continued to move at low levels. Although sales remained solid due to demand for raw materials and other products, earnings conditions remained difficult.」