Liberty Steel To Cut Over 350 Jobs In Newport And South Yorks – BinaryOptions

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A Guide To The COVID-19 Economic Situation

Covid-19. Even if you don’t get infected with the virus itself, it is absolutely certain that you will, to some extent, find yourself dealing with the fallout and the financial consequences.

The state of the world’s financial markets is changing by the day. More and more money seems to be being lost, and even huge injections from governments around the globe are only capable of doing so much to provide stability in what is, in essence, the most unstable economic landscape since the end of the Second World War.

Key Elements

However, we are going to do our best here to highlight the key things you need to be aware of in the current climate, and what is (potentially) going to happen in the coming weeks/months.

1. Oil Prices May Continue To Slide

Oil prices are already hitting new lows, and it is very likely that this trend with continue for the foreseeable future, largely because there are other concerns that are now taking centre stage.

Oil prices will become more stable at some point in the future – whatever the world looks like following the coronavirus pandemic, we will still need oil – so it is unclear how long such a slide will last, and what the market will look like in the coming months and years.

2. Some Investors Will Lose Faith

Given that the market is going through a period of unprecedented turmoil, it is unsurprising that some investors are already losing faith and getting rid of stocks and shares in the hope of clawing back some of their money.

Those that are astute with spotting investment opportunities could, in theory, benefit.

3. Remember That A Falling Market Is, Not Always, A Bad Market

There is a lot of fear around at the moment with regard to investing and putting money at risk, and while this is, of course, the case, it is worth noting that this could be a good time to invest in some stocks.

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Nobody has a concrete idea of when things could ultimately stabilise, but it is important to remain calm and to think intelligently. Eventually, the market will correct itself, and if you invest diligently and shrewdly in the coming weeks, you could benefit in both the short- and long-term.

The largest UK banks have announced they will put together extensive contingency plans to ensure that the UK economy and stock market continue to function properly. Also, to ensure the banks can keep running with their staff, under fears that the coronavirus could continue to wreak havoc on the country as cases grow.

HSBC Case

After an employee at HSBC’s office in the City was confirmed to have the virus, precautions are now being put in place by multiple institutions to ensure that any exposure to the virus is limited and any employees exhibiting symptoms can self-isolate before it spreads.

The bank sent 100 employees home after it was discovered after a staff member had contracted the virus following travel from Asia.

There are several stages to contingency plans made by the major banks and will likely disrupt business over the coming days as they attempt to keep up their day to day operations.

Staff at Goldman Sachs and JPMorgan have been temporarily relocated to offices outside of the City to reduce any potential spread of the virus, though there have been no confirmed cases from employees within these companies.

Many of the now-empty locations are undergoing deep cleans to ensure that any remaining bacteria is disposed of properly.

FCA Statement

The Financial Conduct Authority (FCA) also issued a statement saying that while it had no issue with staff working from home or out of another office to their usual place of work, legal practices and regulations still had to be followed.

The regulator noted that it would be keeping a close eye on employees to ensure they follow typical procedure.

However, whilst several banks have released contingency plans, there are many who will struggle to support the day traders who work within their companies.

Traders and sellers generally sit together on the same floor during trading hours so they can be monitored to meet regulatory standards – making it impossible to work from home.

The banking sector is just the latest to develop contingency plans to continue day-to-day operations if the coronavirus continues to spread, with supermarkets, healthcare providers and the British government all creating plans to keep the country up and running in the face of the virus.

The fate of British Steel has been hanging in the balance since the company fell into insolvency in early 2020, however, Chinese company Jingye is set to finalise their purchase in the week commencing 8 March 2020.

Jingye To Buy British Steel From The Insolvency Service

The rescue deal had stalled due to worries expressed by the French government regarding the inclusion of the Hayange plant within the sale.

This plant is one of the profitable areas of the business and manufactures rail lines which are seen as vital to the French national infrastructure.

However, as of early March 2020, the French government has failed to put legal measures in place which would prevent Jingye from acquiring the Hayange manufacturing plant.

This has encouraged the Chinese buyer to go ahead with the purchase from EY insolvency practitioners. The purchase price was £70mn, and the company intends to invest over £1.2bn in their new business.

Around 400 employees at British Steel are likely to receive redundancy notices, while 3,200 workers will retain their jobs.

New employment contracts for employees being retained were issued on Monday, 2 March. There are 100 additional workers to be transferred to Barrett Steel, a UK-owned brand which is also buying the distribution centre’s side to the British Steel business.

About The British Steel Liquidation

British Steel went into liquidation in May 2020, and unions have been negotiating terms and conditions with Jingye since January this year.

The loss of 400 jobs is the worst-case scenario, and these are the first job losses from the British Steel plant, which is based in Scunthorpe. The Chinese manufacturer intends to increase the plant’s production from 2.5mn tons of steel annually up to at least 3mn.

The Jingye Chairman, Li Ganpo, has been quoted as telling senior plant managers: “Need funds? No problem. Jingye is here to invest.

Despite the potential redundancies it really does look as though things are looking brighter for British Steel and ensures steel is still manufactured in the UK. Unions have advised members to accept the new contracts they’ve already received, in order that Jingye hit the ground running on the takeover date.

The background of the HS2 has been long and controversial, with many people threatened with being uprooted from their homes and much debate around the large expense.

However, the struggle has seemingly been won as the UK government announced its plans to approve the HS2 project.

The route, which is set to link London, Birmingham, Manchester and Leeds, aligns with the government’s desires to create more jobs and rebalance the country’s economy.

The project, which is already running behind schedule and over budget, is now due to be completed in full by 2040.

Project Clarity

After much confusion over the status of the project, the recent statement from Prime Minister Boris Johnson giving the project the green light has worked to fix some of the uncertainty that had been hanging over HS2 and its associated engineering companies.

Not only has the government backing for HS2 had a direct impact on several shares in the engineering sector, but it has also provided a further boost for other companies that have been on a rally in recent months.

Where uncertainty had previously been hanging over Balfour Beatty, Costain and Kier, shares have now been boosted.

So, which other companies and shares have been affected by the announcement?

FirstGroup (LSE: FGP) is one of the companies that has been buoyed by the recent news, especially as FirstGroup recently secured the rights to a joint venture on the West Coast Mainline that will include the HS2 line.

FirstGroup’s shares have risen 4% to 130p after a continuous rise over the past year.

Hargreaves Services (LSE: HSP) has also been positively impacted by the news of HS2’s progress. Hargreaves Services is the preferred supplier for many of the specialised earthworks set to take place between London and Birmingham for the new railway line.

Costain (LSE: COST) has had an order worth £1.1 billion on their books for the new high-speed railway line, along with more works with southern main, going some way to pick up the price of their shares.

Their shares previously dropped on the UK’s December 2020 election day after receiving their second profit warning in six months. Since then, Costain’s shares have rallied by 5%.

Keir (LSE: KIE) has received a boost since the HS2 decision was announced. Keir previously crashed to their lowest level in 20 years during 2020, however, there is £1.5 billion in their order book that has been counting on the approval of the HS2.

Balfour Beatty (LSE: BBY) secured a contract in September for the construction and delivery of the HS2’s Old Oak Common Station worth £1 billion, leading the recent confirmation of the project to be welcome news.

Go-Ahead Group (LSE: GOG) represents a further boost in transport shares beyond railways, growing an added 2% to 2,166p.

This rise has been due to the separate plans to funnel £5 billion into new buses, new bus routes and more frequent bus times.

Over two million passenger journeys are made using Go-Ahead buses each day, and the company is responsible for 11% of national services.

Overall, the news is looking good for the transport sector in the UK. Not only has the HS2 announcement caused a boost in engineering and transport shares, but a recent announcement of £170 million funding to electric buses, increased rural mobility and the trial of new Superbus services has no doubt positively impacted shares for the foreseeable future too.

The recent Luanda Leaks investigation illustrates the fragility of Africa’s burgeoning economy once again. They are also a significant signal to global traders of just how important it is to carry out research prior to any dealings in shares or currencies, particularly if ethical trades are a primary consideration.

Isabel dos Santos is the richest woman in Africa and was educated in the UK.

She worked for Coopers & Lybrand accountancy firm after graduation. Could it be this connection that encouraged what has been termed her subsequent ‘pillage’ of the fragile Angolan economy?

Daughter of former Angolan President, José Eduardo dos Santos, she has managed to rack up a personal wealth of around $2bn through her business dealings and offshore financial transactions.

About The Luanda Leaks

The Luanda Leaks build on the Panama Leaks of April 2020 (which were sourced from the offices of the law company Mossack Fonseca) and offer even more insight into the corrupt dealings of people in power.

These “Luanda Leaks” relate to around 715,000 documents which are currently being reviewed by the International Consortium of Investigative Journalists.

The Panama Papers include about 11.5mn encrypted documents, and these were initially passed over to Suddeutsche Zeitung, and are still under scrutiny today.

Advantages

Isobel dos Santos is the daughter of Angola’s former president, and it seems she has taken advantage of this position in life to siphon off virtually all the assets of her country.

Her father, Jose Eduardo dos Santos, had ruled this oil-rich country with an iron fist since 1979, but stepped down in 2020/18.

Angola had previously been a Portuguese colony but achieved independence in 1975, in much the same fashion as many of the Middle Eastern countries this resulted in a long, drawn-out civil war.

The new President of Angola is currently investigating the Isobel dos Santos fortune, however, the leaks have already illustrated that the Sonangol state oil company which she managed throughout 2020 and 2020 was totally drained of all assets during this time.

Cash had been transferred out of the country to alleged management companies and other business providers (all headed up by dos Santos), leaving Sonangol with just $309 cash in hand by 16 November 2020. Other Angolan businesses operated by dos Santos and her husband are also implicated within these leaks.

Dos Santos vehemently denies any wrongdoing, however, it’s difficult to deny facts when they’re published worldwide. Canny investors with an interest in ethical share and currency deals should always keep stories of this nature in mind, when trades seem a little too good to be true!

While all eyes have been watching British Steel for announcements of closure or job cuts, the steel industry is hit with more bad news. The Liberty Steel group took over Tata’s former British Steel plants in South Yorkshire and Newport back in 2020, but announced on 9 January 2020 that more than 350 jobs would be lost due to “challenging market conditions“.

Liberty Steel

Liberty Steel operates the former specialist steel arm of Tata and has said that more than 280 jobs will be lost in South Yorkshire and 72 in the Newport area of South Wales.

Unions are in consultation with Liberty Steel in the hope of avoiding any compulsory redundancies.

Liberty Steel employs around 2,000 workers in South Yorkshire, and the losses will mainly be at its Stocksbridge plant where 250 redundancies are anticipated.

In addition, there will be 17 jobs lost in Rotherham, 15 in Brinsworth, alongside the 72 losses at Newport.

Larger Corporation

Liberty Steel is just one aspect of the Liberty House Group, which was launched in 1992 by Sanjeev Gupta while studying at Cambridge University.

The acquisition of Liberty Speciality Steels took place on 1 May 2020, and Liberty has acquired a number of companies since that date.

These include Cape International a classic car parts specialist based in the West Midlands, a number of US businesses, and seven major steel and fire service centres previously owned by Arcelor Mittel.

Low Production

The decision to cut UK jobs was a result of low production forecasts, and Cornelius Louwrens, the Chief Executive at Liberty Steel, commented:

Liberty has taken enormous strides in improving the performance of the steel mills it has acquired over the last six years. We’ve re-started mothballed plants and demonstrated a commitment to invest in the UK. Unfortunately, the steel industry in the UK is facing challenging conditions and we have made the difficult decision that there is a need to reduce the workforce at a handful of locations, in order to make them sustainable for the long-term.

It is understood the UK government is monitoring this situation; however, union leaders are gloomy about any acceptable resolution to the problem.

The Competition and Markets Authority (CMA) will launch an official investigation into Amazon’s purchase of a share in UK food delivery service Deliveroo after it was announced that the two companies had failed to come up with enough justification for the sale to go ahead.

Concerns Raised

Earlier in December, after the CMA voiced concerns over the sale reducing competition within the UK based food delivery sector, the authority gave the companies a week to provide sufficient evidence that the sale would boost competition, rather than hinder it.

The CMA now believes that its concerns about limitations for other competitors were justified and will commence an investigation in the New Year.

CMA Statement

In a statement released by the authority, representatives said they had found just concerns that the sale of a significant share in Deliveroo to the e-commerce giant Amazon would not only hurt competition in the market, but could also hurt customers, restaurants and grocers across the UK.

The £440m deal, which has been controversial since it was first made public in the summer of 2020, could now face up to six months of intense scrutiny from the CMA, who may rule that the deal would do more damage than good.

The primary reason the CMA have scrutinized this deal so closely is perhaps because they’re acutely aware that Amazon could launch their own delivery service in the UK market, rather than buy a share in an already established company.

This would stimulate competition within the market and could ultimately generate lower prices for better quality goods for consumers.

Latest Amazon Attempt On Food Market

Amazon has tried this venture once before with Prime Restaurants but failed to make a splash within the UK’s market. Currently, Deliveroo sits as one of the market leaders, alongside Just Eat and Uber Eats.

It operates in most of the major cities across the UK and several in Europe and is looking to continue expanding, should the deal with Amazon be successful.

However, Deliveroo may not be on the market for very long. Uber Eats have reportedly been in talks with top executives at Deliveroo to buy the company outright, something Amazon attempted to do just a few years ago.

After Britain went to the polls on December 12th, electing the Conservatives into office for another five years with a majority of over 60 seats, markets and stocks across the United Kingdom saw significant shifts and changes as the world reacted to the re-election of current PM Boris Johnson.

Sterling Gains

Sterling made a sharp jump upwards after the exit poll results were announced last night and rose over $1.35 at one point as the results were coming in, a figure that has not been seen since the summer of 2020.

The pound, which has been struggling over months of economic uncertainty, also saw an increase against the Euro, reaching its highest levels in almost three and a half years.

Mr Johnson has pledged to take the United Kingdom out of the European Union by January and its hoped that it will end years of uncertainty about how and when Brexit will commence.

The FTSE 100 index rose by around 1.1% as results were officially declared and some UK specific shares, known as the FTSE 250, saw record highs thanks to the election results.

In shares that are closely tied to the British political arena, prices appeared to rise steadily through the day.

Industries that a Labour government had pledged to nationalise, including water and building and construction, saw steady increases in share prices. Severn Trent, the water provider, saw their share price increase a healthy 9% during trading.

Companies within the rail and energy industries, the former of whom had been the target of Labour’s nationalisation plans to combat high ticket prices, saw steady increases in trading prices throughout the day.

Brexit Risks Dampen Initial Reaction

Whilst many have celebrated the buoyancy of the market in response to Mr Johnson’s election, analysts have warned investors not to get too comfortable with the positivity.

Brexit negotiations have been less than smooth so far and public opinion could change over the coming months.

Moreover, this is just the beginning of negotiations for the exit and a trade deal still needs to be discussed and approved by governments in both the UK and the EU. If the sailing is rocky, the economy and the markets could be hit badly.

Sterling in particular has already given up the post-election gains, as the risk of a no-deal Brexit has increased after PM Johnson set the December 2020 trade deal date in stone.

Brexit and issues surrounding any future No Deal Brexit have dominated UK headlines for months, and one of the latest warnings about the future of manufacturing in the UK related to the car sector.

The Society of Motor Manufacturers and Traders which represents the entire vehicle sector in the UK issued a bleak update on Brexit on 29 November, which is unlike to provide solace to workers within the trade or public bodies.

British Car Sector Warning

In a statement, the Society said that there would be far fewer cars produced within British manufacturing over the next five years if the sector had to follow WTO (World Trade Organisation) rules.

The WTO fall back could be a result of a no deal or the default position the UK adopts at the end of the Brexit transition period.

They said that research had indicated that around £3.2bn could be added to British manufacturing costs as a result of tariffs, making production virtually unviable.

Output Drop

The statement also added that global manufacturers moving production elsewhere and a fall in demand could mean the total manufacturing output for the sector drops to around 1mn annually.

At present, there are 1.3mn vehicles produced in the UK and this figure had risen consistently in the years prior to the EU Referendum in 2020.

At that time there were about 1.7mn cars produced and forecasts for 2mn by 2020 were being batted around by analysts.

Huge Costs

The Society went on to warn that cumulative costs of Brexit under WTO rules would amount to £42.7bn by the year 2024, meaning several thousand jobs in the sector would be at risk.

At present, there are 168,000 workers in the UK car manufacturing sector.

As a result, the statement concluded by calling for: “an ambitious deal that eliminates tariffs, delivers frictionless trade, maintains regulatory alignment and secures access to talent from right across the globe“.

George Gillespie is the President of the Society and he urged all political parties to work with the sector, saying:

Uncertainty over Brexit and future trade has cost us dearly. We have all spent millions on no-deal preparations – not once, not twice, but three times. Wasted millions that could, should have been spent on research, on development, on design.

The parent company of UK pharmacist and retailer Boots, Walgreens Boots Alliance, have seen their share price peak late this week after rumours began to circulate that a private equity firm, KKR, has made a deal to buy out the company completely.

The deal, which if it is successful will be the biggest buyout of a major company ever, would take the company off of the stock market and turn it private for the first time in decades.

KKR Buyout

KKR used to own shares in the international company – which trades under the name Walgreens in the United States – which they sold in 2020. Now, however, it seems as though the equity firm is eager to buy out the company completely.

Walgreens Boots Alliance currently operates in 25 different countries and is globally worth over $50bn. But its debts are forever expanding with a reported $17bn yet to be repaid.

The company has already begun to take cost-cutting measures by closing stores across the UK and laying off a round of employees both at its centralised offices and its various locations.

Store Closures

Earlier in 2020, Boots announced they would shut 200 of their stores across the UK. Whilst the company was not actively looking for investment proposals from larger companies, it appears that KKR sees a plum investment opportunity in the company, whose UK stores are one of the most familiar faces on the struggling British high street.

However, experts have already suggested that such a deal may run into trouble before it even gets going.

Whilst KKR has reportedly made their first bid to Walgreens, it’s likely they’ll have to compete with other investors if the company opens up the floor to other deals. Moreover, removing the firm from the stock market and operating completely privately is unlikely to be popular with shareholders.

There were reports made earlier in the week that the WBA were actively exploring private investment deals, but no firm had engaged with the struggling business until now.

When the news about the potential deal broke, Boots’ share price experienced an upturn of around 6% after prices had steadily fallen over the last three quarters of 2020 by an average of 20%, thanks to its fledgling profits.

Liberty Steel Newport

Liberty Steel Newport Manufactures & suppliers of quality Hot Rolled Coil (HRC) for the domestic and export markets. Supporting industrial applications such as construction, automotive, pipes & tubes, SHS, highways & others. Liberty Steel Newport has a proud tradition of producing HRC with a history spanning 40 years. Located in South Wales, with excellent transport infrastructure links for road, rail and own dedicated port on the River Usk, the business produces quality HRC for the domestic and export markets.

All material is 3.1-certified and structural grades are additionally CE-marked, with principal grades being S235, S275, S355 and DD11.

Liberty Steel Newport produce a range of widths between 980mm & 1540mm in a combination of thicknesses from 1.5mm to 12.5mm. Intermediate sizes are available upon request.

The HRC manufactured supports a variety of industrial applications including, but not limited to construction, automotive, pipes and tubes, structural hollow sections, highway, yellow goods, materials-handling and power.

Ferrous Metals – Raw Materials & Steels

Liberty has been trading a wide range of raw materials and products related to the ferrous industry for over 24 years. The business has built strong lasting relationships with many supply mills and end users.

Iron ore fines, iron ore lumps, iron ore pellets, pig iron, scrap, hbi/dri, metallics, coking coal, coke and thermal coal form part of the Group’s raw materials portfolio. These materials are then incorporated into the steel making process, either through blast furnaces, electric furnaces or coal based sponge iron routes.

Liberty also sources thermal coal for power plants that are allied to ferrous production units and leverages its expertise to supply stand-alone power plants as well.

The bulk of the company’s trade is in products that are processed further and serve as input material in industrial units. Liberty trades bulk volumes in blooms, billets, slabs and hot rolled coils. Blooms and billets are further rolled into deformed bars, wire rods, structurals and other long products by our customers. Slabs are rolled into plates or hot rolled coils and hot rolled coils are further processed into pipes and structures or rolled further into cold rolled coils.

While the trading part of the business is focussed on bulk inputs, Liberty also seeks to enhance its offerings through local service, distribution and stock centres by competitively sourcing finished steel products ranging from wire rods and deformed bars to cold rolled and coated steels.

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