Fitch Ratings says it expects higher volatility risks for CIS metals and mining companies in 2012 following their strong performance in 2011. The agency has a stable outlook for the sector in 2012. This may be revised to negative if stronger-than-expected global shocks seriously affect the issuers' capital structure and liquidity profiles.

Weaker market conditions coupled with excess industry production capacity supports Fitch's conservative view of the global steel sector's development in 2012.

However, major CIS steel companies, including Evraz SA, Metinvest BV, OAO Severstal, OJSC Magnitogorsk Iron and Steel Works, OJSC Novolipetsk Steel with control over raw materials supplies resulting in higher margins are better prepared for the potential economic downturn versus their global peers.

Fitch expects companies in the mining sector, including Ferrexpo plc, JSC Holding Company Metalloinvest, OAO Raspadskaya, OJSC Alrosa, OJSC MMC Norilsk Nickel to deliver strong financial results in 2011.

The agency estimates mining companies' free cash flow generating ability will reduce in 2012 due to moderate price decreases following its rally in 2011, coupled with sustained CAPEX. However, credit metrics should remain quite strong in the medium term.

(Sourced from www.cbonds.info)