Machine tool exports last month dropped 19.16 percent year-on-year because of declining demand in the US, the Taiwan Machine Tool & Accessory Builders’ Association (TMBA) said yesterday.

However, with market sentiment improving in Europe, the pace of export decline is likely to slow later this year, although the depreciation of the Japanese yen could remain a threat to Taiwanese exporters, the association said.

"Japanese companies have yet to fully reflect the yen’s depreciation into their product prices,” association secretary-general Carl Huang said. “It would be a threat to Taiwanese firms’ profit margins if their Japanese competitors were to start cutting prices.”

Machine tool exports totaled US$321.71 million last month, down from US$397.97 million the previous year, but up 3.5 percent from June’s US$310.95 million, TMBA data showed.

Exports to the US declined 48.32 percent to US$27.77 million last month from US$53.75 million the previous year and 4.6 percent from US$29.1 million the previous month.

Huang said inventory levels remain high in the US because American companies imported a significant amount of machine tools under a tax reduction scheme in 2011 and last year. The scheme ended at the end of last year.

Given a shortage of workers in the manufacturing industry, US companies are unlikely to substantially increase purchase of machine tools to build new equipment in the near future, Huang said.

The latest industry data also showed that machine tool exports to China dropped 24.17 percent to US$113.25 million last month from US$149.36 million a year ago.

Exports to China in the first seven months of the year also dipped 16.8 percent to US$714.17 million from US$828.88 million a year ago as the Chinese economy slowed, Huang said.

However, machine tool exports to Germany rose 134.6 percent to US$17.92 million last month from US$7.64 million the previous month, data showed.