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Quarter-End Insights

Our Outlook for Basic Materials Stocks

Commodities are hot again, but much depends on Asian demand and government action.

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  • Performance in the basic materials sector will be driven by emerging-markets demand, government regulation, and government spending. These look to be tailwinds through 2010.
     
  • While application rates for fertilizer have shown a promising trend recently, continued concerns about oversupply may damp long-term profitability.
     
  • Steel production in China and India continues to be the key driver for coal and iron ore pricing. Robust demand through 2010 will be a powerful potential catalyst for pricing.

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