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Quarter-End Insights

Our Outlook for Basic Materials Stocks

We're still waiting for steel and construction materials to follow the rest of the sector's rapid recovery.

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  • As long as metals prices remain high and borrowing costs stay low, we're likely to see more marginal mining projects getting the green light and fewer projects ending up on the cutting room floor.
  • For U.S. steel producers, we believe the fourth quarter should mark the bottom for earnings, but production discipline across the board will be critical to preventing a repeat of the crash and burn from 2010.
  • Although U.S. coal demand trends (both short and long term) are weak, exports could put a floor under U.S. prices, and hence earnings, for our companies.

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