Favorable Outlook For Materials Industry Sectors

Sept. 28, 2006

Despite an expected U.S. economic slowdown in 2007, several materials industry sectors show promising outlooks according to an industry sector study issued by global trade credit insurer Euler Hermes ACI. The U.S. Industry Outlook report from Euler Hermes ACI's risk underwriting department indicates improving conditions for capital goods and steel industries. Over the past several years, the capital goods sector was weak but improving, states Patrick Lane, risk vice president at Euler Hermes ACI. Early this year, manufacturing capacity utilization was above 80 percent, which typically prompts companies to make capital spending commitments for expansion. The steel industry, which has rebounded from harsher conditions in the past several years, should maintain its current levels and shows a fairly positive outlook because of strong demand and discipline by the market leaders. According to risk vice president Tony Clary, large producers with access to capital markets have pursued acquisition strategies to take advantage of the consolidation caused by a large number of bankruptcies, 36 in all, that took place during the late 1990s and early 2000s. The U.S. Industry Outlook report provides an overview of a dozen different industry sectors and their respective risk grades as determined by Euler Hermes ACI.

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