Our Outlook for Basic Materials Stocks
Weak demand leads to falling prices and production curtailments.
Weak demand, falling prices, and production curtailments were the norm for basic materials companies in the latter part of 2008. The credit crisis and weak global economy are crimping demand for basic materials. This, in part, is leading to lower prices. In response, companies are curtailing operations and shelving expansion projects. And in some cases, malignant credit conditions and weak balance sheets are forcing producers to delay expansions. Dynamics in the copper, chemicals, fertilizer, and coal markets provide salient examples of the trends affecting basic materials companies.
Elizabeth Collins does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.