Kobe Steel said it fully felt the impact of the US-China trade war
Capitalization of Kobe Steel Ltd. hit its lowest level in nearly seven years after shares in Japan's third-largest steelmaker lost 13 percent in Tokyo.
The company's shares have lost the most since 2017 after the company posted a net loss of 1.2 billion yen (roughly $ 11.2 million) in the three months to June 30, and Kobe Steel's net income is projected for the whole year will fall by 72 percent.
The impact of the US-China trade war "has become evident and the outlook is uncertain," said Yoshihiko Katsukawa, senior executive officer of Kobe Steel, at a briefing in Tokyo on Friday.
Metallurgists around the world face a diminishing outlook as growth slows, trade risks rise and commodity prices rise. Japanese company Nippon Steel Corp. suffered the biggest drop in eight years on Friday after the publication of its annual profit forecast, and the industry giant ArcelorMittal has reduced its estimates on global demand.
Kobe Steel's quarterly earnings were "particularly weak in major divisions as the global slowdown in macroeconomic growth weighed on steel, aluminum and excavators," analysts at Jefferies (Japan) Ltd. said in a report. Thanh Ha Pham and Sangin Yun. “We believe the new leadership is still based on overly aggressive assumptions.”
According to Kobe Steel, the trade war will reduce revenues at the metallurgical plant, which accounts for about 37 percent of sales, due to lower sales to car buyers outside Japan, as well as lower revenues in the aluminum and copper business. Revenues will be further constrained by declining excavator sales in China.
The trade war escalated last week after President Donald Trump attempted to impose a new round of tariffs on Chinese imports, and Beijing promised to respond with countermeasures if the US attacks.