The outlook for the Latin American metals and mining sector in 2013 is mostly stable,although ratings agency Standard&Poor's is expecting metals prices to continue to drop.
According to the agency,the prospects for slower global economic growth will continue to keep a lid on metals prices.
S&P said in an industry report that sovereign distress in Europe and uncertainty due to potential fiscal adjustments in the US could add to commodity price volatility.
Economic growth in Latin America has slowed in line with the global economy,and S&P is expecting real GDP growth for the region to average about 2.7%in 2012.
The agency said that"Still,we expect growth to recover to around 3.5%in 2013,assuming Brazil's economy picks up following a number of fiscal incentives and more flexible monetary policies."
Economic growth in Chile,Mexico and Peru is forecast to remain around the same in 2013 as in 2012 thanks to strong domestic demand.
In S&P's basecase scenario,growth in the US will be up slightly to 2.3%from 2.1%in 2012.Chinese GDP will increase to 8.2%in 2013 from 7.5%in 2012,while Europe will contract around 0.8%in 2012,with no growth for 2013.
The agency said that"As a result,we expect small price increases in iron ore and copper exports from Latin America or potentially marginal drops from current levels."
S&P is predicting that steel prices will remain mostly flat due to excess supply and subdued demand in the developed world.
The downside scenario for Latin American economies,to which S&P assigned a 30%probability,sees flat average regional growth next year due to the risk of lower growth in Europe,the US and China.
