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Quarter-End Insights

Our Outlook for Basic Materials Stocks

Companies scramble to de-lever in a sour economy. China to the rescue?

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As the second quarter draws to a close, basic materials companies continue to struggle with the unhappy conditions that have defined the sector since the fall of 2008. Feeble demand, soft pricing, and diminished fixed cost absorption have significantly damped sales and profitability for most firms in the sector. With the near-term demand outlook as cloudy as ever, debt-laden players throughout the industry have scrambled to clean up their over-levered balance sheets.

Daniel Rohr does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.