International credit ratings agency Standard and Poor's announced on April 13 credit watch placements for some iron ore producers including Anglo American, BHP Billiton, CAP, Eurasian Resources Group, Exxaro Resources, Fortescue, Rio Tinto and Vale. The agency said that this decision follows its revision to lower iron ore price assumptions to US$45/mt for the rest of 2015, to US$50/mt for 2016, and to US$55/mt for 2017.
S&P said that the revision of price assumptions and the sharp fall of iron ore spot prices reflect the severe supply and demand imbalance in the market, which could persist for the next two years due to the continued and sizable expansion of seaborne iron ore supply by major players and softer demand growth from China.
The credit watch placements signal the likelihood of a number of negative rating actions after the completion of sector review.