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Send  Print  Share  RSS  Twitter  09 Nov 2010

Base Metals Rally to Continue

 
Johannesburg, Nov 9 (I-Net Bridge) - Global credit ratings agency Moody's stable outlook for the global base metals industry reflects the view that fundamentals in the industry remain supportive of price levels that will allow for continued recovery in the industry's earning power over the near-term.

Releasing its latest report on the sector, Moody's said over the medium-term, support will continue to be derived from growing economies in developing countries and increasing industrialization. However, new mine development will increasingly be in countries with greater political risk profiles and development time frames are likely to be longer.

"We expect continued price volatility as global economic recovery remains uneven and China has taken deliberate steps to slow its growth," said Carol Cowan, Moody's Vice President-Senior Credit Officer.

Thus far, the improved demand and price environment has largely been led by robust demand growth from China as well as strength in India and Brazil. Although prices recovered in the latter part of 2009 and continued to improve in 2010, Moody's believes that a concerted global recovery is necessary for sustainable recovery across the base metals complex.

"There is likely to be true demand growth over the next 12 to 18 months and therefore, we do not expect a reversal in prices to the lows of late 2008 and early 2009," Cowan said.

Prices are also expected to remain within acceptable ranges in 2011 due to improving - albeit slow - fundamental demand in the developed countries, and a more sustainable growth rate in countries such as China and Brazil, the report said.

However, factors such as the level of consumer confidence, continued high unemployment levels, financial system stability and credit availability, could affect the timing of a robust and sustainable recovery, said Moody's.


I-Net Bridge, Tel: +27-11-280-0644, newsdesk@inet.co.za

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