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Quarter-End Insights

Our Outlook for Basic Materials Stocks

Basic materials companies are in a period of very mixed near-term outlook in terms of end-market demand.

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  • The near-term outlook for U.S. construction activity and North American demand for agricultural inputs is bright. Demand for thermal coal should also improve in 2013 relative to a disastrous 2012.
  • European end-markets are extremely weak due to government austerity measures and fragile economic activity. Steel producers, paper markers, building materials companies, and chemicals firms will all likely suffer depending on the extent of their exposure to Europe.
  • Chinese demand for steelmaking raw ingredients is likely to be very volatile in 2013, but ultimately we are relatively bearish on this country's demand for metallurgical coal and iron ore.


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