Tata Steel To Sell Off Long Products Business, Affecting Thousands Of British Jobs

[Sancho Panza]

Telegraph 15/10/14

'Tata Steel is planning to sell its Long Products division, which employs thousands of workers at several sites in the UK.

The steel giant said it had signed a Memorandum of Understanding with the Klesch Group, an industrial company which operates across Europe.

The planned sale covers several UK-based sites including Tata Steel's Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and a rail consultancy in York, as well as other operations in France and Germany.

About 6,500 people are employed at Long Products Europe and its distribution facilities, supplying products for industries including construction and excavation. Just under 6,000 of these are in the UK.

Unions said they were disappointed with the way the announcement had been handled and were seeking talks to discuss any impact on jobs.'

Finace Asia 14/10/14

'Tata Steel, the Indian steel maker, has launched a jumbo $3.1 billion-equivalent loan package into general syndication as it seeks to refinance debt taken to fund its acquisition of Anglo Dutch steelmaker Corus, according to two sources familiar with the matter.

Tata Steel acquired Corus in 2007, trumping a bid by Brazil's CSN, but has since struggled with the acquisition and soaring debt levels. The loans come due early next year but the company has sought to refinance the debt ahead of schedule.'

Market Watch 13/10/14

'HONG KONG (MarketWatch) — As global steel prices face downward pressure from falling demand, the situation in China is making the problem all the more intractable, as overcapacity is prompting Chinese steel enterprises to cut their prices in order to boost exports.

Data from the China Iron & Steel Association (CISA) showed Monday that domestic steel prices have been falling for 12 straight weeks, with the Steel Composite Price Index down more than 13% compared since the end of last year, even as the nation’s construction activity and real-estate market are cooling significantly.

The average price for the range of steel products on offer has fallen to 3,212 yuan ($520) per metric ton for the first half of the year, down 28% from the average price in 2012, CISA data showed.'

[The Masked Tulip]

There is lots of anthracite uder Margam near the Port Talbot works and rumours of lots of shale gas in the Swansea Bay area.

It is claimed that Tata is only keeping Port Talbot open, or have not tried to sell it, because they want the Welsh Assembly to give them the rights to make a fortune mine/drill the stuff.

It will be interesting who actually gets the rights eventually.

[billybong]

Cheaper steel so new house prices should be cheaper.

[zugzwang]

Cheaper steel so new house prices should be cheaper.

Cheap as Chinese cabbage.

[Wurzel Of Highbridge]

Cheaper steel so new house prices should be cheaper.

On the average house build materials are less than 30% of the build cost. Fancy flats in London that cost 1m+, its around 10% materials.

[interestrateripoff]

Cheap as Chinese cabbage.

http://davidstockmanscontracorner.com/how-central-bank-finanical-repression-has-sown-bubble-liquidation-and-industrial-deflation/

The 300 million tons or 40% gain since 2010 is a striking measure of the current global derangement. China’s steel capacity expansion in just the last four years exceeds the combined capacity of the entire steel industry of Europe and North America combined. Yet China’s sustainable domestic need is arguably less than 500 million tons per year—once its spree of constructing empty apartment buildings, unpopulated cities, redundant highways, bridges, airports and high speed railroads and unneeded industrial capacity comes to an end—as it surely must and will. Even the comrades in Beijing are signaling a resignation to that unavoidable outcome.

..

Indeed, the real problem is that once this immense capacity was brought into being, it was not going to go quietly into the night. China’s true excess capacity now amounts to upwards of 50% of steel production in the rest of the world. Consequently, when China’s domestic consumption is sharply curtailed as the world’s greatest historical building boom winds down, the flow of excess plate and sheet and rebar and structural products into the world steel markets will have a relentless shocking impact. Prices and profits will be crushed everywhere; and protectionist policies not seen since the 1930s are likely to be kindled.

After all, it only need be recalled that 85% of all the growth in global steel production since the year 2000 has been attributable to China. In the rest of the world, steel production during the last 14 years has barely inched forward—growing at just 1.1% per annum owing to a tepid level of end demand. So when the flood of dumped still comes flooding in from China, it is evident that the absorption capacity is next to zero.

Yep if the China has all this steel, it's going to get dumped somewhere on the world markets.

[Rare Bear]

On the average house build materials are less than 30% of the build cost. Fancy flats in London that cost 1m+, its around 10% materials.

Yes, it used to be take the materials cost and multiply by three for a rough and ready building cost calculation. Once for material, once for labour and once for overheads and profit. I would reckon that these days a factor of four could well be nearer the mark with increased cost for labour due to various bits of legislation and increased overheads due to legislation again.

[Stainless Sam]

The logic is unavoidable. Beat enegy intensive strategic industries to death with carbon taxes and ignore the carbon cost of transporting Chinese stuff half way around the world. You couldn't make it up.

Long products means rebar, sections and girders, anything that gets turned on a lathe or drawn into wire. So that's the construction industry pretty much accounted for, as well as much of engineering and some aerospace.

If they are selling Scunthorpe plus Dalzell and Clydebridge then it's not just long products it's plate as well. So all your submarines, large diameter pipes, yellow goods, engineering fabrications, etc. are going to be made with foreign steel.

Maybe UK sites for a while, but there's European over capacity and it's easier to get rid of people here, so medium term decisions are going to be obvious.

The only bulk steel production left in the UK will be strip products, which used to have a big part in car manufacture but guess what, they're all moving to aluminium. You can see where this is going.

Now tell me that manufacturing industry is important to the coalition.

.

Edited October 15, 2014 by Stainless Sam

[chronyx]

The logic is unavoidable. Beat enegy intensive strategic industries to death with carbon taxes and ignore the carbon cost of transporting Chinese stuff half way around the world. You couldn't make it up.

.

Will that help the BDI?

[frozen_out]

It"s not just steel, the Chinese have done this with everything. The world chemical industry used to be broadly in a state of equilibrium, the Chinese have now installed vast overcapacity in all major chemical building blocks and completely skewed the market, to the point where some chemicals are cheaper than the feedstock used to produce them. And huge numbers of plants are sat idle.

I'm guessing many of these were built simply to consume steel.

It's utter madness.

Edited October 15, 2014 by frozen_out

[onlyme2]

It"s not just steel, the Chinese have done this with everything. The world chemical industry used to be broadly in a state of equilibrium, the Chinese have now installed vast overcapacity in all major chemical building blocks and completely skewed the market, to the point where some chemicals are cheaper than the feedstock used to produce them. And huge numbers of plants are sat idle.

I'm guessing many of these were built simply to consume steel.

It's utter madness.

Ultra cheap money/financiang and globalization.

China didn't come to the market to compete with the competition, they came to bury it. Blame the pigs/morons/treasonous politicians who provided the money and the shovels, at our expense.

[long time lurking]

There is lots of anthracite uder Margam near the Port Talbot works and rumours of lots of shale gas in the Swansea Bay area.

It is claimed that Tata is only keeping Port Talbot open, or have not tried to sell it, because they want the Welsh Assembly to give them the rights to make a fortune mine/drill the stuff.

It will be interesting who actually gets the rights eventually.

There is lots of anthracite uder Margam near the Port Talbot works and rumours of lots of shale gas in the Swansea Bay area.

It is claimed that Tata is only keeping Port Talbot open, or have not tried to sell it, because they want the Welsh Assembly to give them the rights to make a fortune mine/drill the stuff.

It will be interesting who actually gets the rights eventually.

I think those rights have been granted (Margam drift mine) and this is the reason Tata spent 500 million pound building a new blast furnace a few years ago and are still investing heavily , up gradeing the mills at Port Talbot

[billybong]

It'll be something to do with the recovery.

[19 year mortgage 8itch]

Cheap as Chinese cabbage.

Just as strong as cabbage too.