Moody’s downgrades mining sector outlook to negative www.mining.com
Credit rating firm Moody’s Investors Service said on Thursday it had changed its outlook for the global metals and mining Industry from stable to negative as a global economic slowdown continues to soften demand.
The downturn is affecting prices, which consequently reflects a decreasing profitability for the largest Moody’s-rated companies in the industry during the upcoming 12 months, the firm said.
“[EBITDA and prices] will remain higher than in pre-pandemic years but below the record-high levels seen in early 2022,” says Moody’s senior vice president Barbara Mattos.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) will significantly decline for producers of base metals, including copper, nickel, aluminum and zinc, Moody’s financial research experts said.
Moody’s downgrades mining sector outlook to negative
Moody’s expects copper miners to face EBITDA declines due to lower production volumes
in certain regions, higher input costs and lower prices. At the same time, low inventory levels and supply challenges in main copper-producing regions such as Chile and Peru will limit copper-price declines, it says.
Aluminum producers re expected to be the worst hit as prices for the have fallen drastically from recent record highs, while energy and key raw material costs remain high, particularly in Europe. This combination will reduce companies’ margins and earnings, Moody’s says.
While gold is often seen as a hedge against inflation, the agency notes that prices for both the yellow metal and silver are declining due to higher interest rates and a stronger US dollar. Unlike other metals, market sentiment rather than fundamentals such as supply and demand, influences pricing in this industry, which will negatively affect precious metals miners’ EBITDA.
Today’s report follows one Moody’s published in early September, which lowered its 12-month price assumptions for certain metals and mining commodities.
Published Date:2022-09-26