MARC has today published an updated version of the
methodology it uses to assign ratings to companies in the steel industry. This
update supersedes MARC’s “Steel Industry” methodology published in April 2015.
The updated methodology incorporates recent developments
in the steel industry including changes in the pricing mechanism of raw
materials, industry landscape and supply-demand dynamics. It also refines our
analysis of steelmakers’ financial risk profiles, particularly with respect to
cash flow adequacy and liquidity. The adverse operating environment in the
steel industry in recent years has brought steelmakers’ working capital
positions and liquidity risks into sharp focus, necessitating an analysis of
the impact of uncollectible accounts and tightened access to external funding.
Overall, there are no material revisions in the
updated methodology that would result in rating changes arising from the
implementation of this methodology update. The updated methodology can be
accessed on MARC’s website at Rating Approach to Steel Industry.
July 31, 2017
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