In This Issue: Global Growth Has Metals Prices Gleaming: The global economy keeps chugging ahead, and with it so does demand for nickel, copper, iron ore, bauxite, and other metals. The combination of strong demand and weak supply has strengthened the credit quality of mining and metal companies around the world, and Standard & Poor's doesn't foresee any quick changes in either of these fundamentals.A Surge In Chinese Aluminum Production May Put High Prices In Reverse: It's been a heady ride for the price of aluminum. However, Standard & Poor's believes that the price of aluminum will gradually begin to decline. The primary reason is the rapid decline in the price of alumina, the raw material for aluminum. Nickel Producers Are Winning The Game Of Supply And Demand-For Now: Nickel prices should remain very strong throughout 2007, although the currently astronomical prices of more than US$20 per pound are likely unsustainable and negative economic news could lead to a sharp correction to prices. While Gold Prices Continue To Shine, Industry Credit Quality Is Losing Its Luster: The spot gold price is trading near 12-month highs of US$690 an ounce, and some bullish market watchers are predicting the 1980 record of US$850 an ounce could be under threat over the next few years. A number of factors have contributed to the recent rally including the depreciation of the U.S. dollar and inflationary concerns. High Copper Prices Cast A Glow On Global Producers: Standard & Poor's expects global copper producers to continue to reap the benefits of a positive pricing environment in 2007 and 2008. The ongoing increase in worldwide demand in conjunction with very low inventory levels supports this thesis. Regional Differences Color The North American Coal Pricing Picture: Although the prospect of further greenhouse gas legislation limiting carbon dioxide emissions has quelled some of the enthusiasm for coal-fired generation of electricity, coal is likely to remain the dominant fuel for electricity generation in the U.S. for the foreseeable future. Favorable Market Conditions And Consolidation Buoy Credit Quality Of European Steelmakers: Against a backdrop of supportive steel prices, Standard & Poor's expects the credit outlook for Europe-based steelmakers to remain broadly stable. Cash flow is healthy and leverage is generally low. Latin American Steelmakers Forge Ahead With Expansion And Acquisition Plans: Fueled by firm steel prices and growing demand, Latin American steelmakers are poised to report another year of robust results. More important, these companies continue to strengthen their commercial relationships with export clients, using cost advantage to reach distant markets. Why Chinese Steel Exports Aren't Likely To Push Down Global Prices: Is China set to roil the global steel market? It became a net exporter of steel only in 2005, with just 6 million metric tons. But in 2006 that number hit approximately 40 million metric tons. And this rapid growth has created apprehension about the global industry's future. | 
