KOMATSU FEELING THE PAIN OF FALLING DEMAND FOR ITS PRODUCTS IN CHINA

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Japanese Komatsu (OTCMKTS:KMTUY), the world’s No.2 mining and building equipment maker, has admitted that sales in China are declining faster than expected, mirroring rival Caterpillar (NYSE:CAT) in lower demand from Asia.

The company’s sales were down 20% yer on year in April / May in a market that represents 9% of Komatsu sales.

In an interview with Bloomberg, Chief Executive Officer Tetsuji Ohashi said sales in Indonesia were also likely to be significantly lower as many mines are idled on the government’s ore export ban.

In April the company had forecast that global demand for mining equipment in the financial year to March 2015 would be of about 2,000 units, down 38% from a year ago, as miners continue to cut spending. In 2011, around 7,000 units were sold in the now depressed market.

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The news don’t come as a surprise for investors following the latest developments in China, where 20% to 30% of all its iron ore mines are shutting down, with more closures likely to come as costs rise.

Henry Sapiecha

 

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