Japan’s Mitsui & Co sees China’s coronavirus epidemic, probably slowing manufacturing activity, while slumping commodities prices, along with iron ore, may weigh on its revenue, the trading house’s official stated on Tuesday.
Hong Kong registered its first demise from the novel coronavirus Tuesday, the second outside mainland China from an epidemic that has killed over 400 individuals, spread around the globe, and heightened fears for global financial growth.
Mitsui had estimated a pickup in the auto and electronic components industries from the January-March interval; however, the coronavirus epidemic has overturned such a hope, he stated.
Weaker activity in the auto sector could reduce demand for metal products, which may affect already under pressure iron ore prices, he stated.
Iron ore futures in China plunged to their weakest stage in almost three months Tuesday, as worries intensified over the economic impact of the virus.
Mitsui owns stakes in numerous iron ore mines, and its net revenue drops by 2.1 billion yen ($19.27 million) if iron ore value dropped by $1 a tonne.
There has been no straight impact on its enterprises so far from the spreading virus, Uchida stated; however, Mitsui is taking measures to prepare for possible force majeure or other disruption to the distribution of commodities and products.
Mitsui mentioned it booked a 22 billion yen impairment loss on the Moatize coal mine and Nacala Corridor rail & port businesses in Mozambique in the quarter running from October to December to mirror a revision of their enterprise plans.
Nonetheless, it kept full-year revenue guidance of a record 450 billion yen for the year to March 31, saying higher profits from heavy oil trading at its energy trading subsidiary in Singapore helped offset the one-off loss.