UPDATE 2-Mitsubishi Materials resumes full copper output
* Mitsubishi Materials says situation still fragile
* Japan's No. 1, No 2 copper smelters keep output cuts
* Smelters keep eye on domestic, China demand (Adds company official comments, background)
TOKYO, Aug 10 (Reuters) - Mitsubishi Materials Corp (5711.T), Japan's No. 3 copper smelter has returned to full production, the firm said on Monday, becoming the first major Japanese firm to reverse cuts, although the situation still needs watching.
Most Japanese smelters have been producing about 10 percent less copper than their capacity since early this year after the global economic crisis drastically cut demand for the metal, used in a wide range of sectors from electronics to power.
Data shows that the slump in Japan's domestic demand for copper products is showing signs of easing, although levels remain sharply lower than a year earlier. [ID:nT366297]
Mitsubishi Materials officials said the company had returned to full production from this month, although the situation still required careful monitoring as demand had not returned to levels prior to the economic slump.
Kenichi Watase, general manager of the firm's sales department, said it had resumed full production after some technical problems at its facilities had forced it to produce less than it planned at the start of the business year.
"We are currently running at full capacity now to catch up (after output disruptions)," he said.
He said the budget for the second half of the year to end in March was being drafted on the premise that the firm's smelters would continue to run at full capacity.
Watase noted that it was more economically viable to run operations at full, although the decision to run at full capacity was not engraved in stone.
"We will have to continue to keep careful track of the economic, and demand, situation," he said.
Rivals said they were not yet ready to reverse their cuts.
Nippon Mining & Metals Co Ltd, the parent company of Pan Pacific Copper Co Ltd, Japan's largest copper smelter, said it was still producing about 7 percent less than its capacity, a cut implemented since April.
"We are still continuing to follow the situation, and there is nothing specific at the moment to change," a company spokesman said.
Nippon Mining & Metals Co Ltd is part of Nippon Mining Holdings Inc (5016.T).
Sumitomo Metal Mining Co. Ltd. (5713.T), Japan's second largest smelter, also said it was still running at about 10 percent below capacity.
China has imported large volumes of copper from Japan since late last year, helping to offset slack domestic business, though some industry officials are cautious about how long this will last.
Latest figures show Japan's refined copper exports in June soared 156 percent from a year earlier, with the bulk going to China. [ID:nT3321] Refined copper imports by China, the world's top consumer, hit a record for the fifth month in June.
One industry official, who declined to be identified, said that other Japanese smelters could decide to return to full production in the second half of the year, given signs of a recovery in demand.
"All smelters want to return to full operation...as output cuts make it more expensive to produce copper," he said.
He said copper stocks had fallen to about 44,000 tonnes, the lowest level since November 2001, thanks in part to production cuts. (Editing by Clarence Fernandez)
