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COVID-19 has dominated the news cycle as it continues to impact the global economy. The stock market has wiped out years of gains in just a few days, many industries are coming to a standstill by suspending production temporarily, and countries are shutting down their borders for all nonessential travel.

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Below we will discuss the latest insights and news impacting the metals and manufacturing sector. As we continue into 2020, we’ve seen businesses sharpen their focus with divestitures and M&A activity. We’ve also seen businesses close their doors.

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2019 was a turbulent year for the metals sector. Metal prices tumbled to multi year lows after reaching record highs the previous year. Trade talks dominated the news and despite reducing imports, tariffs did little to support metal prices.

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Customer visits have numerous benefits and there is nothing like in-person interaction to help build a trusting relationship. Taking the time and making the effort to visit will help you better  understand your customers. A visit provides an up-close view of the customer and their business.

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Managers face important decisions every day, decisions that may affect the future of the company. This is especially true when business owners need to make risk management decisions. Different management styles can lead to avoiding, reducing, transferring, or accepting these risks.

ProfitGuard   — September 2019

As of July 2019, the current business cycle which began in June of 2009, reached a historic record as the longest U.S. economic expansion on record as it hit 121 months. As a refresher, a typical business cycle has four parts, expansion, peak, contraction, and trough.

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The month of August saw some acquisitions in the scrap metal segment and JSW Steel USA put its backward integration and new EAF plant on hold due to current market conditions. Meanwhile, the oil and gas industry continues to reel from volatile energy prices plaguing the segment.

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Working capital management is an area that most companies can improve on to help generate cash and boost liquidity. It measures a company’s ability to pay off shortterm expenses or debts, as well as the company’s potential for growth.

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There are many different types of bankruptcy a distressed company may utilize; however, two of the most common forms are Chapter 11 and Chapter 7.

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Steel prices and aluminum premiums have faced headwinds this past year despite the support of U.S. tariffs. With the U.S. removing tariffs on Canada and Mexico, prices are set to face additional pressure, which will impact companies’ earnings and credit metrics.

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The one constant in the scrap industry is that it is always changing. In this webinar we discussed the concepts of credit risk, the steps you should take to mitigate these risks and why it's dangerous to be complacent. View PG’s Webinar hosted by ISRI on May 15, 2019.

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As a credit manager, you want to keep a tight leash on accounts receivable during the last inning of the current credit cycle. What steps can you take to be proactive?

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Make no mistake, the corporate credit climate is changing. We are observing an uptick in defaults, missed interest payments, and bank compliance issues. This evolving risk picture could be the first signs of more to come.

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On February 4, 2019, S&P Global Ratings affirmed JW Aluminum’s credit rating while it was noted that any setbacks in the company’s expansion could put pressure on its credit metrics and liquidity. Vallourec also reported better than expected results, which caused its bonds to trade higher. Lastly, Moody’s Refinancing Indicator hit a five-year low and small business

ProfitGuard  —December 2018

Credit conditions in the metals sector remain stable in general. Economic conditions are mostly positive in North America with continued GDP growth and favorable, albeit slowing, end markets for most metal suppliers. However, there are a mix of factors that are more likely to pressure economic conditions

ProfitGuard —September 2018

Overall business conditions in the metals sector remain positive. Pricing has remained elevated in general for most metals and demand has been strong. Despite these solid conditions, credit risk remains in pockets. 

ProfitGuard—September 2017 

In our view, the metal segment is experiencing strong market conditions for the most part. However,  credit risk remains at a moderate level in our view due to a few drivers.

ProfitGuard—May 2017

ProfitGuard (PG), the leading provider of business credit information to the metals industry is excited to unveil its redesigned platform that will revolutionize the way credit professionals in the metals industry make credit decisions and consume information.

ProfitGuard—March 2017 

The current environment, bankruptcy trends, and impacts on corporate credit.

ProfitGuard—October 2016 

The current environment, bankruptcy trends, trade payment behavior and impacts on corporate credit.

ProfitGuard—October 2016

When a Business Decision Trumps a Credit Decision.

Scrap Magazine—May/June 2015—By Jason Dworin & Vic Sandy

Two emerging trends drive home the difficulty of managing credit risk in a rapidly changing business environment.