2015 Outlook: Metals and Mining (Exploitation Versus Growth)

...Stable Outlooks Reflect Cash Flow Focus: Producers have been managing for a slower growth environment for at least three years. Productivity benefits to earnings are offset by lower prices. Fitch Ratings believes 2015 iron ore prices will be below its long-term assumption of $90/tonne but remain well above average costs. Gold prices have been very close to Fitch's price assumption of $1,200/ounce which compares to average all-in costs of $1,000. Click here for the most recent report. Spending Discipline: Most companies cut capital budgets beginning in 2012 and turned the focus to cost cutting. Driving productivity has exacerbated oversupply in some markets, but lower project spending should result in a better market balance longer term. Most metal and mineral prices are not high enough to attract capital for greenfield projects. Market Supply Differentiates: Heavy investment in prior periods, reluctance to curtail high- cost capacity and moderating growth in the emerging markets have resulted...

Outlook