While acknowledging the current price would have a direct negative impact on its Australian rated producers – Atlas Iron, BHP Billiton, Rio Tinto and Fortescue Metals Group – other businesses will be hit over the next 6-12 months.
 
"Lower prices – combined with the general softness in prices across the whole commodities spectrum – is exercising a flow-on negative effect on several issuers and sectors across the rated portfolio, including mining services, construction and airlines," Moody’s vice-president and senior analyst Matthew Moore said.
 
On the mining side, Atlas was the most vulnerable due to its higher costs and widening price discounts for its ore, Moody’s said.
 
Atlas’ all-in delivered costs for the 2013 financial year were about $A77 per tonne.
 
The iron ore price overnight for 62% fines was $US83/t.
 
Moody’s said FMG was the most affected of the majors due to its single commodity status, while BHP and Rio would benefit from diversification.
 
"To preserve margins, we expect the miners to reduce their scope of work and renegotiate contracts with the providers of mining services, which will in turn further reduce earnings and cash flows at the latter," Moore said.
 
Contractors like Leighton Holdings were expected to be hit with lower project work, while a drop in workers would hit airlines like Qantas, as well as Perth Airport, a major hub for fly-in, fly-out passengers.