Base Metal Companies to Slash Capex

Fitch says in a note that it expects capital spending in the global base metals industry to fall between 5% and 15% in 2009 and between 35% and 40% in 2010. The decrease is expected to come hand in hand with weaker earnings and cashflow, despite lower production costs resulting from the drop in energy, fuel and feedstock costs. Fitch says that severe demand declines for most metals in the second half of 2008 have resulted in rising stocks and falling prices. In response, producers have been taking production off-line and slowing expansion spending, but not enough to hike prices.