Atradius pulls cover on UK decoiler C Browns

Leading credit insurer Atradius has totally withdrawn cover on UK decoiler C Brown and Sons, which is based in Dudley in the West Midlands, according to market sources.

UK decoilers have had a very difficult year, with continuous declines in coil prices hitting stock value and weighing on margins — in the UK, softer hot-rolled, cold-rolled and galvanised coil prices are very quickly factored into processed sheet sales prices, but uptrends typically take longer to pass through. At present, deals for first-quarter hot-rolled sheet supply are being done below, admittedly high, import offers for hot-rolled coil (HRC). Some groups have sold first-quarter sheet at £424/t delivered, while Turkish material is being offered at around £445/t ddp West Midlands.

Credit insurers' have also reduced their appetite because of the high-profile administrations of Meridian Metal Trading and Parker Steel, and British Steel going into receivership.

At least one large mill selling to C Browns has had its cover totally withdrawn by Atradius. But another mill has recently sold to the company and kept cover through another insurer. Atradius refused to comment on individual businesses when approached by Argus.

Another leading insurer, Euler Hermes, refused to comment on specific businesses, but sources close to the insurer said it was still providing cover on C Browns and had not reduced its limit.

"We cannot comment on any relationship we have with Atradius but we are sure you are aware of the current trading conditions that are affecting all within the steel stockholding sector," C Browns director Tim Brown told Argus. But the firm "remains financially sound and we do not envisage any difficulties in the foreseeable future", he added.

Some were surprised that the company had its cover withdrawn by Atradius, as it is an established firm with a strong bank of contract business, they said.

C Browns holding company C Brown Services made a profit of £735,537 (€865,000, $962,000) in the financial year to May 2018, generating cash of £486,223. Cebron Holdings, in which some of C Browns' directors are also involved, was voluntarily liquidated earlier this month, with the shareholders receiving £640,000.

By Colin Richardson