Financial Team

() New York – Things are looking up for the metals and mining sector, according to Standard & Poor’s, who said that credit quality for U.S. metals and mining companies continues to gradually improve.

The report, “U.S. Metals And Mining Credit Quality Is Improving In Line With Economic Conditions,” cites the ongoing economic recovery and improving demand as two factors that are helping the sector.

“Although demand is unlikely to bounce back to the levels of the first half of 2008 in the near term and the recovery is likely to be uneven across the sector, we expect credit quality to continue to strengthen during 2010 along with the general economy,” said Standard & Poor’s credit analyst Marie Shmaruk.

Revenues are still subdued compared with historical levels, but inventories are low throughout most of the supply chain and even the current modest recovery has supported improved pricing, utilization rates, and sales volumes, which have resulted in better financial performance for most industry participants.

Despite our more positive view of credit quality in 2010, our outlook remains cautious because credit metrics for a number of companies remain outside our range of expectations for their respective ratings. Slower economic growth than we currently expect could result in weak credit ratios and, as a result, we could still lower some ratings.

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Tags: Mining Sector, Sector