Standard & Poor's Corp. said Friday the U.S. government's decision to place tariffs on steel imports will not immediately affect the agency's ratings on Japanese steelmakers.
The agency warned, however, that cutbacks in exports to the U.S. from other regions, such as other parts of Asia, could increase the flow to Japan and heighten the problem of oversupply.
The announcement was made after U.S. President George W. Bush said Tuesday his administration will impose three-year tariffs of up to 30 percent on a range of steel imports from Japan and other countries in a bid to rescue the struggling U.S. steel industry.
The U.S. credit-rating agency said the move will have little impact on earnings of Japanese steelmakers because their exports to the United States have been small.
Exports to the U.S. by the five leading Japanese steelmakers -- Nippon Steel Corp., Kawasaki Steel Corp., NKK Corp., Sumitomo Metal Industries Ltd. and Kobe Steel Ltd. -- represent at most 5 percent to 6 percent of their total production, the agency said.
S&P said its ratings on Japanese steelmakers are all in the "speculative grade category," reflecting the high leverage and weak financial profiles of the companies, as well as the severe business environment.
"The most critical issue facing the steelmakers is a downturn in domestic demand, which is likely to continue over the next few years amid weak capital spending and a slump in the construction industry coupled with the persistent problem of overcapacity," it said.
The previous day, Sumitomo Metal Industries, Kobe Steel and NKK said they had cut their earnings forecasts for the current fiscal year, ending March 31.
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