Written by: Andrew Pappas
August, 2026- 2025 and 2026 have been a challenging and highly unpredictable period for many companies, particularly within the metals sector. A number of macroeconomic, geopolitical and industry-specific developments have created significant uncertainty, including:
• The continuation of the Russia-Ukraine political conflict.
• The increase in Section 232 tariffs to 50 percent on imported steel and aluminum, with
• The introduction of the International Emergency Economic Powers Act (IEEPA) tariffs following “Liberation Day” in April 2025, which heightened recession concerns and disrupted business planning. Although these tariffs were ultimately struck down by the U.S. Supreme Court in 2026, they had a significant impact throughout 2025 and into early 2026.
• Escalating geopolitical tensions in the Middle East, affecting global supply chains and the availability of certain raw materials.
• Slower economic growth in both the U.S. and global economies.
• Persistent inflationary pressures, with interest rate reductions largely halted during 2026.
• Continued acceleration of artificial intelligence, grid electrification and alternative energy initiatives, all of which have increased demand for critical resources.
• Ongoing efforts to secure critical minerals and reshore manufacturing operations to the United States.
• Rising metal prices, which have increased working capital requirements and financing costs for many companies.
The introduction of the Liberation Day tariffs initially shocked financial markets and caused many lenders and businesses to pause strategic initiatives. As recession concerns began to subside, management teams reassessed their capital structures and financing arrangements to determine whether existing facilities remained appropriate for an increasingly volatile operating environment.
Beginning in the second half of 2025 and continuing into 2026, BMO observed a significant increase in activity as companies pursued one of two primary strategies:
• Evaluating strategic alternatives, including a sale of the business. Many family-owned metals companies, particularly those without a clear succession plan, began exploring sale opportunities or obtaining valuations to better understand their options.
• Testing the financing markets. Companies sought to optimize their capital structures by increasing liquidity, improving borrowing availability and ensuring they had sufficient flexibility to withstand future economic or market disruptions.
Given the volatility in the metals space, most companies have moved to an asset-based lending facility that can provide the highest working capital advance rates and minimal financial covenants, which focus on liquidity versus financial performance. This provides companies with the optimal banking structure, particularly during challenging periods.
In short, ongoing uncertainty related to tariffs, geopolitical conflicts, supply chain disruptions, inflationary pressures and rising commodity prices has driven many companies to either evaluate strategic transactions or seek stronger, more flexible financing structures.
The BMO ABL Special Industries Group has been exceptionally active over the past 12 months, supporting both merger and acquisition activity and companies seeking additional capital. As part of these efforts, many businesses have sought:
• Increased borrowing base availability through broader asset eligibility and higher advance rates.
• Greater flexibility around financial covenants and reporting requirements.
• Lending partners with deep industry expertise and a demonstrated willingness to support companies through cyclical downturns.
Many management teams have reviewed their banking relationships and financing structures. While pricing and advance rates remain important considerations, many companies have prioritized lenders that understand the unique dynamics of the metals sector and can act as long-term partners throughout market cycles.
As an asset-based lending platform in North America with a dedicated metals lending team, BMO is expert at providing clients with tailored financing solutions and industry insights. This sector focus enhances BMO’s ability to educate credit stakeholders and structure facilities that reflect the realities of the metals marketplace.
As the head of the BMO ABL Special Industries Group, overseeing more than 17 professionals, 115 client relationships and about $8 billion worth of commitments, I work closely with companies across metals and mining and other industries. In a rapidly evolving environment, partnering with an experienced lender that understands industry trends, market volatility and changing capital requirements is crucial.
Regardless of the environment, lending remains a relationship-driven business. Companies benefit most from financial partners who can respond quickly to changing conditions and will support long-term growth through all cycles.
ANDREW PAPPAS is managing director–head of ABL Special Industries Group at BMO, Chicago; . Banking products and services are subject to approval and are provided by BMO Bank N.A. Member FDIC.
