Key issues facing companies in the UK metals sector include:
Further consolidation in most metals sectors, notably steel, is required to sustain a competitive industry, resulting in greater bargaining power, production discipline and investor interest. The majority of M&A activity is taking place in the mid-tier, with many smaller companies becoming niche in their strategies and production - such as steel finishing.
Listed metals companies must adapt to changes brought about by the introduction of International Financial Reporting Standards (IFRS). Concurrently, companies are reviewing their existing financial and non-financial reporting to identify those key performance indicators for inclusion in the Operational and Financial Review (OFR).
Under the EU Emissions Trading Scheme, UK metals companies face strategic decisions on cutting their carbon emissions, investing in international emissions reduction projects or trading emissions - a decision which includes both risk and potential opportunity. Not only are a company's operations affected but there are also tax, legal and regulatory implications.