The plunge in crude oil prices is taking its toll across Japan’s industrial base.
Forecasts from Nippon Steel & Sumitomo Metal Corp., Japan Marine United Corp. and Komatsu Ltd. show the extent to which lower crude prices are eroding the outlooks for companies involved in different businesses.
Nippon Steel today said that it will take a 68.6 billion yen ($583 million) charge related to a Brazilian venture that makes pipes for crude producers. As a result, the Japanese steelmaker said it now expects net income to total 180 billion yen this fiscal year, down about a quarter from the 250 billion yen the company had earlier forecast.
“We began to see an impact on seamless pipe operations gradually due to the sharp decline in recent oil prices,” Katsuhiko Ota, an executive vice president at Nippon Steel, told reporters in Tokyo at a briefing. “If oil prices remain below $50, customers will likely refrain from ordering pipes.”
Vallourec SA, the producer of steel pipes that owns more than half of the Brazilian affiliate with Nippon Steel, said today it plans to write down assets by as much as 1.2 billion euros ($1.4 billion) to reflect lower spending by energy producers.
Meanwhile, Royal Dutch Shell Plc reported today lower-than-expected fourth-quarter profit and said it will cut $15 billion of spending over three years.