Japan-based steelmaker Kobe Steel cuts its earnings forecast as the company anticipates Japan’s economy to remain weak amid a slump in exports.
Kobe revised its fiscal 2019 sales guidance down by 4pc or JPY80,000mn ($728.79). The company’s net loss is expected to further widen to JPY15,000mn from JPY5,000 announced on Nov 6.
In third quarter (Q3) 2019, Kobe’s crude steel production dropped to 5mn mt from 5.08mn mt in the prior year. Company’s average steel price during the quarter was JPY87,400/mt from JPY86,000/mt in Q3 2018. Kobe’s crude steel production guidance for FY2019 is revised to 6.60mn mt from 6.80mn mt. In FY2018, Kobe produced 6.91mn mt crude steel.
Manufacturing and export-centric economy of Japan is expected to remain weak due to the impact of coronavirus, geopolitical risks and other factors adding to the global slow down. Demand for iron and steel is expected to decline on weak global auto sales and decreased construction activity in Japan. Kobe Steel expects to drop in inventory valuations and fall in sales volumes to adversely impact its fourth quarter and full year earnings.
Demand for aluminium and copper is also expected to drop amid delayed recovery in the semiconductor and auto sectors.