Liberty Speciality on verge of stopping production

Liberty Speciality Steels could stop production imminently as it cannot source sufficient scrap after some suppliers moved to cash-up-front terms.

The company had been experiencing difficulty before Greensill Capital's issues because of the downturn in the aerospace sector amid the Covid-19 pandemic. News of Greensill's financial problems, and the fact that Liberty has stopped making payments on the facilities, has alarmed scrap sellers in the UK.

Some are demanding cash up front, while others will struggle to renew credit insurance policies that are about to lapse. Sources suggest that the business needs over £10mn in the next day or two to buy material and pay wages.

A note is circulating within the scrap industry telling sellers to consider their direct and indirect exposure to the company. The note lists four non-ferrous suppliers thought to have significant exposure to the group.

The company has already told ferrous suppliers it is not buying material for March.

"The severe downturn in the aerospace sector over the past year has placed significant pressure on Liberty's speciality steel business in Stocksbridge. We continue to manage the impact on our customers and workforce while we adjust to challenging conditions," a spokesperson said.

Buyers in the UK hot-rolled coil market are also concerned about the fate of the company's Newport rolling mill. Some service centres are heavily exposed to the business and could be seriously short of supply if it stops production.

Much of the raw material at Liberty, and the finished coil, is owned by different creditors, and sources are concerned the lenders could pull out given recent coverage of the company's finances.

The company sent a letter to customers in Europe and the UK last week aimed at assuaging their concerns.

By Colin Richardson