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Black Country Chamber of Commerce Highlights Problems at Tata

BhanuRecent press reports are suggesting that the major trade credit insurers are withdrawing cover for supplies to TATA Steel, presenting a fresh hurdle to plans to provide stability in the UK steel sector.

According to reports in the Financial Times, trade credit insurance (against potential non-payment risk) is being withdrawn progressively, and rapidly, from today.  Such a sudden, if not entirely unexpected, turn of events, could jeopardise government efforts to provide calm to the markets and secure the longer-term sustainability of the UK steel sector.

In the same article, the FT quotes the Association of British Insurers (ABI) that some £4.5 billion of steel sector debts are insured by ABI members, with TATA Steel short-term debt as of March 2015 standing at £2.7 billion of which some £552 million was due to trade creditors.

It is currently estimated that the sector has approximately 1-month of supplies of iron ore and coking coal available, although obviously the range of goods and services providers may become increasingly reluctant to extend further credit.

In response to the news Bhanu Dhir, Head of Policy at the Black Country Chamber of Commerce said: “We, the Black Country Chamber of Commerce and the Midlands Steel Task Group, urge the government to take urgent action to both reassure credit insurers and suppliers that they will make every effort to support the industry, and TATA Steel in particular, during these challenging business conditions.

“We would request the government to hold talks with the main credit insurers to facilitate continued cover; request the banking sector to provide short-term letters of credit to offset the declining access to credit insurance and accelerate implementation of the governments ‘5 Asks’ namely: reducing energy costs for manufacturers beyond EII (energy intensive industries); introducing flexibility over EU emissions regulations; increasing opportunities beyond the public sector as regards procurement; the long-awaited review of business rates in England and revisiting its stance on trade defence.”

Last modified on Tuesday, 26 April 2016 15:52

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