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Quarter-End Insights

Our Outlook for Basic Materials Stocks

Companies with more exposure to the United States should fare better than those tied to demand in Europe and China in 2013.

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  • Fundamentals in U.S. thermal coal should continue improving next year, thanks to rebounding natural gas prices, a hot summer in 2012 that helped whittle down overflowing coal inventories, and significant curtailment in domestic coal production.
  • We think pricing pressure for most industrial metals will continue in 2013, as China--the most important source of demand--inevitably shifts away from its investment-driven growth model.
  • The outlook for steel demand growth in 2013 is strong in the Americas, but we think there is downside risk in Europe and China.


Elizabeth Collins has a position in the following securities mentioned above: WY, FBR. Find out about Morningstar’s editorial policies.