France24 reported that global credit agency Standard & Poor's saw little improvement in iron ore prices in the near term and warned that smaller single commodity miners could see their ratings slip.

S&P said that a slowdown in China and sluggishness in Europe had seen iron ore prices dive from their peak of more than USD 180 per tonne to below USD 90 per tonne in the past 2 months.

S&P said that prices had rebounded to between USD 100 to USD 110 but it doesn't expect iron ore prices to climb much further in the near term and warned that substantially debt laden miners could come under pressure.

S&P in a research said that "We found that iron ore prices need to average above USD 120 per tonne in the near term to alleviate potential negative rating pressure for certain producers, assuming other factors such as costs and foreign exchange rates remain the same."

The agency said that single commodity miners such as Australia's Fortescue Metals Group and Ukraine's Ferrexpo would be under the greatest pressure with iron ore accounting for almost all their business.

Xstrata said that sackings and BHP Billiton shelved plans to expand its massive Olympic Dam copper and uranium project in Australia after reporting a 35% plunge in annual profit.

S&P added that BHP, Anglo American and London headquartered Vedanta were all seen as being relatively robust due to their diversified portfolios with falls in earnings likely to be less than 20% were iron ore prices to remain soft.

Source - www.france24.com

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