Our Outlook for Basic Materials Stocks
Falling commodity prices and rising costs could crimp margins.
Concerns about a slowdown in the global economy have taken a toll on many basic materials companies' shares over the past three months. For the most part, second-quarter results from these companies were strong, as the longer-term themes of developing-market industrialization and a constrained resource base (causing a tight supply/demand balance for commodities) continued to play out. Bright spots included coal, where demand from developing economies drove spot prices for Central Appalachian coal from under $60 per ton at the end of 2007 to $120-$130 today, and agricultural products (such as fertilizer and crop protection chemicals), where spot prices for standard potash rose from $175 per metric ton to $775. On the other hand, weak demand from the North American and European construction industries did impact some chemical companies' earnings.
Elizabeth Collins does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.