Inventory impairments also to take toll

Dec 24, 2008 | 09:36 AM | Corinna Petry

Steel companies with significant or even higher-than-average levels of inventory and long or slowing inventory turns are particularly exposed to material inventory impairments due to the sudden and dramatic drop in steel prices during the fourth quarter, Moody's Investors Service said in an outlook report released Tuesday.

"Due in part to seasonal buying patterns and tighter supplies during the heat of the market in the late summer, many companies ramped up inventory purchases, just as prices peaked. Today, some of the same companies may still be holding significant amounts of expensive, slow-moving inventory in a market where demand has plummeted and where selling prices have declined precipitously, potentially well-below cost," Moody's....

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