Singamas, the second largest container building company in the world, has blamed the US-China trade war for its net loss of $2.1 million for the first six months of 2018.
The company, a subsidiary of Singapore-based transport and logistics company Pacific International Lines, claimed that while trade had been relatively unaffected, its financial profits had shrunk as a direct result of rising freight rates and material costs.
The United States Trade Representative (USTR) finalised the second round of tariffs on $16 billion worth of Chinese imports on August 9, 2018, and will start taking duties of 25% on 23 August.
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Singamas also claimed it was affected by the value of China’s currency, the yuan, which has increased by 5% against the US dollar in 2018.
However, demand for dry freight containers remained healthy, which meant it was the best performing segment for Singamas’ manufacturing.
In a statement, Singamas said: “Although the Group expects the upcoming financial period to be challenging, Singamas’ container orders are already full up to September 2018.
“Also, as the Renminbi has weakened in value, the costs of materials such as steel are expected to moderate. The Group will seek to overcome the challenges through product development and optimisation of business operations.
“Consistent to the latter, the Group has entered into share transfer agreement to dispose its entire equity interest in its subsidiary, Hui Zhou Pacific Container Co., Ltd, in July 2018, which is considered by the Group as a good opportunity for realising a gain therefrom and to generate additional cash.”
Speaking about the results, Teo Siong Seng, Chairman of Singamas, said: “With a highly experienced management team, sound business interests, strong fundamentals and ample resources, we are confident that we will overcome the uncertain market ahead and realise growth in the near future.”
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