After a challenging period of lower prices, things are looking far more positive for the NRU Sector. As David Andrada, Global Sector Head, Natural Resources & Utilities – Global Liquidity & Cash Management at HSBC explains, this means that treasuries in the sector are now having to address a rather different set of demands.
Trading conditions for the NRU sector have improved over the course of 2017. Prices have started to recover and many of the efficiency programs put in place when prices were low have started to pay dividends in terms of reduced operating costs and lower breakeven points1. From a corporate treasury viewpoint, some themes have persisted, while others have changed. For instance, M&A activity continues, so treasuries still ﬁnd themselves having to handle the consequences of asset acquisition/disposal in addition to their everyday workload. As a result, banks capable of shouldering some of this extra workload remain in demand.
Elsewhere, the pressure on working capital has somewhat abated, as companies have renewed revolving credit facilities and beneﬁted from their earlier cost cutting. Instead, a growing number of treasuries are looking for more efficient means of managing rising liquidity levels and improving the returns thereon.
Nevertheless, treasuries still remain focused on improving process efficiency and working capital, so next generation virtual accounts and the extension of supply chain ﬁnancing to smaller suppliers are attracting interest. Finally, new methods of tracing payments and Distributed Ledger Technology (DLT) are becoming more popular discussion points at treasury events and meetings.