Japanese steel mill Kobe Steel has cut 11,000 mt of in-process inventory of aluminium and copper in the April to September 2006 period, and plans to cut more, company officials said on Wednesday.
Hiroyuki Nakayama, senior managing director, said Kobe Steel is making a drastic cut in its in-process inventory in the current fiscal 2006 to reduce the risk of falling commodity prices. The company has cut 11,000 mt of aluminium and copper products, semi-processed products and ingots, which would be equivalent to Yen 4 billion ($34 million) in value. Nakayama said 80% of the inventory cuts were aluminium used at its Moka plant near Tokyo. The company plans to cut 13,000 mt more inventory in the second semester that runs from October 2006 to March 2007.
The company officials, however, said they do not plan to reduce the aluminium purchase volumes for the January to March 2007 contract supply on the back of the in-process inventory reduction plan. The company would cut spot purchases instead, the officials said. A trader close to Kobe Steel said the company has already reduced its purchasing to the lowest possible level and would be difficult to cut purchases further without affecting its output levels. It keeps some of its aluminium ingots for delivery to the Moka plant at the Yokohama port, and as a result of this inventory reduction scheme, the Yokohama stock level may fall by several thousand tons, the trader added.
During the second semester, the company plans to produce and sell 166,100 mt of rolled aluminium products, slightly increasing from the 163,800 mt sold in the first half.
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