The global outlook for credit quality in the global steel and base metals industries remains negative primarily due to uncertainties surrounding the global economic outlook, according to a new report issued on January 21, 2003, by Standard & Poor’s Ratings Services.

“In light of industry concerns, credit quality among European-based metals and mining companies will continue to retain a negative bias at least for the near term,” says Olivier Beroud, credit analyst and director at Standard & Poor’s Corporate Ratings Europe. “With prices at anaemic levels for several years, large producers with access to capital markets pursued opportunistic acquisitions but saddled themselves with increased debt levels that have remained stubbornly high considering poor industry fundamentals.”

There are a few bright spots, however, including gold, which is benefiting from a “flight to safety” and the unwinding of some producer hedge books and nickel, which is benefiting from favourable supply and demand fundamentals.

The report discusses in further detail the various geographical trends for the global steel industry as well as those for base metals and the US coal industry, and looks at individual companies’ performance over the last quarter.