Our Outlook for Basic Materials Stocks
Weak demand abounds, with some pockets of strength and a few surprises.
The beginning of 2009 has been a period of great uncertainty for basic materials companies. The weak global economy continues to weigh on demand for commodities such as steel, aluminum, chemicals, coal, and fertilizers. During their earnings conference calls, many companies' management teams commented that activity in the first quarter was so far mirroring the weakness seen during the end of 2008. The drop in revenues, combined with fixed cost deleveraging, is hurting many firms' earnings and cash flows. Companies are continuing to respond with layoffs, reduced capital expenditure budgets, curtailed production, and now dividend cuts. Some outfits haven't made it, though, and we saw two bankruptcies from our coverage list during the first quarter: containerboard and corrugated box producer Smurfit Stone (SSCCQ) and Chemtura (CEMJQ), a chemicals company.
Elizabeth Collins has a position in the following securities mentioned above: CCJ, MT. 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.