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TEXT-Fitch: base metals producers managing to slower growth
September 17, 2012 / 4:57 PM / 5 years ago

TEXT-Fitch: base metals producers managing to slower growth

Sept 17 - Fitch Ratings expects base metals producers to focus on cost
control and productivity rather than volume growth or expansion over the next
12-18 months as demand growth moderates. In a new report published today, Fitch
details its expectations for the copper, aluminum, nickel and zinc markets and
profitability for producers thereof.

China's demand continues to dominate, and efforts to curb property speculation 
and inflation have resulted in slowing industrial production and metals demand. 
Demand recovery in the developed markets has slowed from earlier expectations. 

Capital projects are being deferred in favor of shareholder returns in this 
environment of lower prices, increased cost pressures and, in some cases, 
curtailed production. Strong liquidity and modest leverage going into this 
period affords time for producers to optimize operations and projects.

The trend toward urbanization in the emerging markets and globalization in 
manufacturing should support continued growth in metals demand. Producers will 
continue to develop projects reflecting low production costs and low capital 
costs in higher growth markets to take advantage of future tight supply. 
Projects requiring substantial investment in infrastructure, in regions without 
a stable legal and regulatory environment, or areas with limited skilled labor 
will be a lower priority. Projects in markets with persistent oversupply will 
not attract capital in the short to medium term but may return to better balance
in the longer term.

The full report 'Base Metals Update' is available on the Fitch website 
'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

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