NEW YORK--()--Fitch Ratings expects lower but more stable prices as steel and steel raw materials producers adjust to a slower growth environment. Prices, earnings and cash flows are expected to be lower in 2013 than in 2011 on better supplied markets. Fitch details its expectations for the iron ore and metallurgical coal markets and profitability for producers thereof in its report '2013 Outlook: Steel Raw Materials Producers'.
Worldwide steel production should grow 3%-4% in 2013 on restocking given scant growth in 2012. Fitch expects steel raw materials prices to stabilize around marginal costs, affording reasonable margins to average and low cost producers. Destocking, weather events and/or labor actions could disrupt shipments and affect prices, earnings and cash flow over the short term.
The Rating Outlook for the steel raw materials industry is Stable. Strong liquidity and modest leverage going into this period affords time for producers to manage to a lower price environment.
Fitch's report titled '2013 Outlook: U.S. Steel Raw Materials', is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: 2013 Outlook: Steel Raw Materials