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U.S. recession would dampen metals demand, exacerbate mining risk
A downturn in the U.S. economy could mean bad news for U.S. mining and metals producers, Standard & Poor's cautions, especially if a recession hurt domestic metals demand.

Author: Dorothy Kosich
Posted: Tuesday , 12 Feb 2008

RENO, NV -

Standard & Poor's warned Monday that the "single biggest risk U.S. metals and mining companies will face in the next several months is the prospect for a downturn in the U.S. economy that materially dampens demand for metals."

Meanwhile, S&P credit analysts Marie Shmaruk advised that financial performance is unlikely to be consistent across the sector.

"Although a prolonged recession could hurt both global producers and mining companies in every region, we expect, given our current economic forecast, that the companies this would hit hardest would be those whose sales are concentrated in the U.S. market," she said. "Thus far, the slumping U.S. economy has predominantly hurt sector players with significant exposure to auto manufacturers and residential construction. With nearly 50% of all aluminum output used in transportation, building, and construction, aluminum prices and volumes have softened, resulting in declining performance in the North American extrusion and non-can sheet business."


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