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Liberty’s relationship with Czech government worsens

  • : Metals
  • 24/04/10

The relationship between Liberty Steel — which owns the Ostrava plant — and the Czech government is breaking down.

Senior Czech politicians and GFG Alliance chairman Sanjeev Gupta held a meeting in Prague today to discuss the plant. GFG Alliance is a loose-knit collection of entities including Liberty Steel.

"I can say that the outcome of the negotiations was very disappointing," Czech Republic Minister of Industry and Trade Jozef Sikela said. "There may be more questions after today's meetings than there were before." Finance minister Zbynek Stanjura also attended the meeting, which the politicians said was at the behest of Liberty.

"Today's meeting with the ministers and their subsequent comments were very disappointing," a Liberty Steel spokesman told Argus. "The ministers showed very little understanding nor the willingness to understand the complex situation. We are afraid that the chances of positive dialogue going forward are bleak. It is important to highlight that we have always abided by all the laws of the country and are doing our utmost to protect the business, its creditors and its employees despite very difficult conditions."

The government has requested Liberty repay more than 8.2bn koruna ($346.1mn) owed to Ostrava from other group entities, including Liberty Finance Management. Liberty's latest restructuring plan for Ostrava envisages repayment of about half that amount, and no repayment to its major creditor Tameh Czech, which is owed more than Kc2bn. Tameh Czech's joint owners, ArcelorMittal and Tauron Energy, are trying to sell the business, which was reliant on Ostrava as its only customer.

The government is also uneasy about Ostrava's reliance on sales of carbon emissions allowances to generate income. Ostrava plans to sell another €44mn worth of emissions rights in May, after selling almost €360mn worth between August 2022 and October 2023, while buying just €183mn worth over the same period, leaving it with a clear deficit.

Liberty faces a reduction in the level of allowances provided to Ostrava because of reduced production in recent years — the company idled the last operational furnace at Ostrava in October and it has not restarted since.

Ostrava's restructuring plan envisages an average selling price of €950/t and above in July, more than €300/t aboveArgus' current benchmark northwest EU hot-rolled coil (HRC) index. The restructuring plan also focuses on production of flat steel, including HRC, cold-rolled coil and hot-dip galvanised. Market participants have questioned whether prices can rise to such an extent given the difficult macroeconomic backdrop.

It has been rolling imported slab at Ostrava and its Hungarian asset, Liberty Dunaujvaros, formerly known as Dunaferr. However, the Hungarian hot-rolling mill has stopped operating as 5,000t of slab at the site has not been paid for, so has not been released by creditors. Swiss and Italian traders have been helping finance some of Liberty's European purchases, according to multiple sources.


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Mexico GDP outlook dims in October survey


24/11/04
24/11/04

Mexico GDP outlook dims in October survey

Mexico City, 4 November (Argus) — Private-sector analysts have again lowered their projections for Mexico's gross domestic product (GDP) growth this year, with minimal changes in inflation expectations, the central bank said. For a seventh consecutive month, median GDP growth forecasts for 2024 have dropped in the central bank's monthly survey of private sector analysts. In the latest survey conducted in late October, analysts revised the full-year 2024 growth estimate to 1.4pc, down from 1.46pc the previous month. The 2025 forecast also dipped slightly, to 1.17pc from 1.2pc. The latest revisions are relatively minor compared to the slides recorded in preceding surveys, suggesting negativity in the outlook for Mexico's economy may be moderating. This aligns with the national statistics agency Inegi's preliminary report of 1.5pc annualized GDP growth in the third quarter, surpassing the 1.3pc consensus forecast by Mexican bank Banorte. Inflation projections for the end of 2024 inched down to an annualized 4.44pc from 4.45pc, while 2025 estimate held unchanged at 3.8pc. September saw a second consecutive month of declining inflation, with the CPI falling to 4.58pc in September from 4.99pc in August. The survey maintained the year-end forecast for the central bank's target interest rate at 10pc, down from the current 10.5pc. This implies analysts expect two 25-basis-point cuts to the target rate, most likely at the next meetings on 14 November and 19 December. The 2025 target rate forecast held steady at 8pc, with analysts anticipating continued rate reductions into next year. The outlook for the peso remains subdued, following political shifts in June's elections that reduced opposition to the ruling Morena party. The median year-end exchange rate forecast weakened to Ps19.8 to the US dollar from Ps19.66/$1 in the previous survey. The peso was trading weaker at Ps20.4/$1 on Monday, reflecting temporary uncertainty tied to the US election. Analysts remain wary of Mexico's political environment, especially after Morena and its allies pushed through controversial constitutional reforms in recent months. In the survey, 55pc of analysts cited governance issues as the primary obstacle to growth, with 19pc pointing to political uncertainty, 16pc to security concerns and 13pc to deficiencies in the rule of law. By James Young Mexican central bank monthly survey Column header left October September Headline inflation (%) 2024 4.45 4.44 2025 3.80 3.80 GDP growth (%) 2024 1.40 1.46 2025 1.17 1.20 MXN/USD exchange rate* 2024 19.80 19.66 2025 20.00 19.81 Banxico reference rate (%) 2024 10.00 10.00 2025 8.00 8.00 Survey results are median estimates of private sector analysts surveyed by Banco de Mexico from 17-30 October. *Exchange rates are forecast for the end of respective year. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Striking Boeing workers to vote on new proposal


24/11/01
24/11/01

Striking Boeing workers to vote on new proposal

Houston, 1 November (Argus) — Boeing workers next week will vote on a third labor proposal from the aerospace manufacturer that could end a seven-week work stoppage that has halted production of several commercial aircraft programs. More than 32,000 Boeing employees represented by the International Association of Machinists and Aerospace Workers (IAMAW) will cast their ballots on 4 November after union leadership and the company struck a tentative agreement on Thursday. The new offer comes with a 38pc general wage increase (GWI) spread over four years and a $12,000 ratification bonus — both up from 35pc and $7,000, respectively, from Boeing's previous proposal that workers rejected on 24 October. Sticking points during contract negotiations have centered around pay raises, with workers seeking a 40pc GWI, and the reinstatement of employees' pension plans. The latter is not addressed in the company's latest offer. Boeing's machinists have been on strike since 13 September, putting a squeeze on the company's finances with output of its flagship 737 MAX aircraft stalled. Production of Boeing's 767 and 777 models also has been disrupted. If the deal is approved, the earliest workers could return to their jobs would be 6 November, with everybody having to be back by 12 November at the latest, the union said. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US job growth slumps in October, jobless rate at 4.1pc


24/11/01
24/11/01

US job growth slumps in October, jobless rate at 4.1pc

Houston, 1 November (Argus) — The US added only 12,000 nonfarm jobs in October, reflecting the impacts of two hurricanes, a strike at aircraft manufacturer Boeing and a slowing trend in hiring prompted by high borrowing costs. The unemployment rate remained unchanged at 4.1pc, still close to a five-decade low of 3.4pc reached in early 2023, the Labor Department reported today. Last month's gains were far fewer than the 113,000 forecast by analysts surveyed by Trading Economics. Job gains for the prior two months were revised down by a combined 112,000 jobs, leaving September with a still robust 233,000 and August with 78,000 jobs. A Labor Department report earlier this week showed job openings in September were at their lowest since January 2021. Still, job gains for the 12 months through October averaged 194,000, a little higher than the 12-month period before Covid-19 struck the US beginning in early 2020, causing millions of job losses and a sharp but short recession. Today's employment report, the last before next week's US presidential election, cements odds of a quarter point cut in the Federal Reserve's target rate next week to nearly 100pc from about 96pc Thursday, according to CME's FedWatch tool. The Fed cut its rate by half a point in late September, the first cut since 2020, as it is just beginning to loosen monetary policy after the sharpest tightening in decades to battle surging price gains. Inflation has since moved close to its 2pc target and job gains have gradually slowed, even as the economy remains robust, growing by nearly 3pc in the second and third quarters of the year. Hurricane Helene made landfall in northern Florida in late September and slammed northwards into Georgia, the Carolinas and Virginia, leaving major damage in its wake. Hurricane Milton struck Florida on 9 October, within the period of both surveys used for the job report. About 32,000 unionized workers at Boeing have been on strike since early September. Job growth trended up in government and in health care and social services, which added 40,000 and 51,000, respectively, while manufacturing declined by 46,000, partly due to strikes. Construction added 8,000 jobs. Average hourly earnings edged up to an annual 4pc from 3.9pc. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

First northwest European HRC options trade on CME


24/10/31
24/10/31

First northwest European HRC options trade on CME

London, 31 October (Argus) — Options contracts settled against the Argus northwest European hot-rolled coil (HRC) index traded today for the first time since their launch on the CME Group exchange more than two years ago. An option on the northwest European HRC contract on CME (EHR) traded today at a premium of €20/t for the right to buy a strip for the first quarter of 2025 (50 lots or 1,000t of January, February and March) at €700/t. Options are a financial contract offering the right, but not the obligation, to buy or sell an underlying asset — in this case the EHR futures contract — for a specific price at a specific point in time. The right to buy is called a call option; the right to sell a put option. The buyer pays a premium to have this right, which is typically used to protect against an adverse market move. The Argus northwest European HRC index stood at €558.75/t on Wednesday, while the January-March futures contracts are currently trading at about €620/t, putting the call option above the current spot market price and forward curve for the contracts in question. Market participants suggested the trade could be part of a ‘short collar' strategy, in which someone who is ‘long' on the underlying futures contract (trading on anticipation of an upwards move) buys a put option (the right to sell at an agreed price) to protect their long position for a premium, but then sells a call option to receive a higher premium to offset the cost of the put. CME Group launched the EHR futures contract in March 2020. Since then more than 3.6mn t of steel futures have traded, with more than 1mn t this year alone. Open interest — a measure of liquidity measuring the volume of open contracts — currently stands at a record high of more than 230,000t. Options were added in May 2022. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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