The second half of 2025 reaffirmed that for the commodities landscape, volatility will continue to be a defining feature. For SMEs reliant on stable input costs for energy, metals, or agriculture, the dramatic price swings of this year across markets were both a huge challenge and a critical learning opportunity.
From macroeconomic headwinds to policy changes and global supply surges imbalanced with demand shifts, this year has underscored the importance of having a robust, proactive hedging strategy that combats uncertainty and reduces the need for you to respond to immediate risk.
Below, we break down key movements in the metals, agricultural, and energy sectors that impacted the bottom lines of small businesses this year, leaving no link in the supply chain untouched.
What pressures created financial difficulties for the UK metals industry?
Over the past six months, small to mid-sized businesses in the UK trading regularly with metals, whether they be in construction, electronics, or manufacturing, have had their fair share of negative cost impacts.
Domestically, a major impediment has been the decision to restrict the export of scrap steel by the British Metals Recycling Association (BMRA). While potentially aimed at securing domestic supply, this restriction has inadvertently created severe negative cost and sustainability impacts.
The ban has constrained the UK’s ability to increase production by melting scrap metal and shift towards a “greener” operational model, dramatically impacting four-fifths of previous export sales.
For many British steel producers, this has led to rising unemployment and increasing operational difficulties in recycling and production chains, all putting pressure on that bottom line.
Adding to these constraints, the European Union has announced a drastic policy shift that has sent shockwaves through the UK. The proposal would see tariffs on steel imports surge to 50% on volumes beyond a severely reduced quota, which itself will be cut by 47%. Considering the UK steel industry sends a massive 80% of its exports to the EU, these incoming levies are not merely
regulatory tweaks; they represent a potential catastrophe for British businesses and jobs.
The UK’s evolving fiscal landscape increases complexity here, particularly following the recent Labour budget. With the introduction of a new Electric Vehicle (EV) tax, the likely downturn of EV demand will trickle down the sales pipeline, putting pressure on relationships between alloy metal producers and EV manufacturers.
This convergence of depressed domestic scrap markets, shifting demand patterns, and tough policy decisions makes accurate forecasting against volatile shocks essential.
What are the immediate impacts of volatility across the energy market?
The global trajectory toward a clean energy transition is one filled with setbacks and pivots, leaving major energy producers to constantly reassess their long-term outlook. As a result, we’ve seen the pausing or cancelling of nearly 60 low-carbon hydrogen projects by oil and gas giants like BP and ExxonMobil due to investment challenges, development costs, and the difficulty of
securing upfront contracts from buyers.
For oil and gas companies, this slowdown in clean energy investment suggests a continued reliance on fossil fuel production for the foreseeable future, but the long-term trajectory of how governments and industries will respond to climate change remains uncertain. Ultimately, oil and gas companies still remain exposed to regulatory shifts, particularly following the UK’s agreement
to reduce greenhouse gas emissions in the next decade at COP 30, the UN Climate Change Conference held in Belém, Brazil, this November.
Despite the long-term questions, the immediate market pressure in the second half of the year came from a massive crude oil surplus. Global supply is poised to outstrip demand by a widening margin, potentially leading to an excess of 4 million barrels a day in the next year. This comes as a result of non-OPEC+ countries increasing domestic oil production, which includes the policy goals of the Trump administration to “Drill, baby, drill“.
Temporarily, the oil oversupply has caused relief regarding energy input costs for UK SMEs, but volatility remains high. This year’s geopolitical developments prove that unpredictable market movements will prevail, and businesses need a long-term solution that will provide stability in the face of this.
What is causing operational difficulties for farms and agricultural businesses across the UK right now?
The agricultural sector also experienced a deeply challenging year, caught between adverse weather, policy shocks, and the infamous US trade war. This perfect storm severely impacted farm profitability and operational stability for food producers, and the second half of this year was marked significantly by domestic pressures.
With farm closures increasing, and the sector simultaneously dealing with the impact of rising inheritance tax, succession planning and the financial viability of family-run farms have become even more complicated.
Operationally, farm profitability was hugely impacted by a shockingly poor harvest and the global market effects of milk oversupply, all while struggling with consistently increasing energy costs.
Compounding these issues is the critical labour shortage, exacerbated by recent domestic policy decisions. The UK’s enforcement of stricter visa rules for immigrant workers, intended to curb net migration, is projected to cost public finances up to £10.8bn, and will directly reduce the availability of the essential skilled labour needed to uphold agricultural production. Farmers have been given an ultimatum of higher costs from domestic labour or pivoting to automated farming methods. Either way, profit margins are being squeezed, and farms are lacking the financial flexibility to withstand this.
Taking international influences into account, UK food producers were negatively impacted by the disruptions of the US-led trade war despite getting a better deal compared to other countries. Under Trump’s decision to raise tariffs on British food products by 10%, American importers were forced to reassess the attractiveness of the UK market. This attitude shift has directly impacted the bottom lines of many UK food producers and processing businesses by reducing international demand, highlighting the intricacies of global supply chains and how complex they are to navigate.
Crucial Hedging Lessons for SMEs
The global commodity dynamics of H2 2025 demonstrate the need to protect your business from market volatility and pricing disruptions. Simple market fundamentals have been overridden by geopolitical agendas and waves of disproportionate financial movements, and so businesses should not hope for stability but create it.
With a structured hedging solution that incorporates geopolitical, trade, and fiscal policy risk while reviewing your business cost structure, you can offset sudden cost spikes and lock in acceptable cost ranges before a crisis hits.
Hedging is not about “beating the market”. It’s about guaranteeing an achievable margin and strengthening business sustainability.
If you’re interested in transforming price volatility into something manageable and integrating macro risk into your business strategy, contact one of our specialists or visit our Explore Zone today.
