Liberty Steel’s financial position is being stretched by the lack of sales it is making, meaning it has fewer invoices to borrow money against.

Liberty regularly generates financing against stock via invoice discounting and factoring. Where sales are not being made, there is nothing to lend cash against.

The company has not been accepting hot-rolled coil (HRC) from its normal supplier ArcelorMittal for the Dudelange-Liege coating lines. However, it has imported from India, several market participants said, although normal supply arrangements could restart soon. One company that was in talks with the business over supply deals walked away as credit insurers would not cover the risk.

Buyers of galvanised from the Benelux coating lines said the company recently fulfilled a third of its orders and cancelled the rest because of a lack of HRC. The lead time from Dudelange-Liege back in January had already extended out to around six months.

“As a group of companies, we have relationships with more than 30 financial institutions around the world, and invoice discounting is just one of a number of strategies we use to finance our business. We continue to manage our cash effectively even as we adjust production on a plant-by-plant basis according to demand,” a Liberty Steel Group spokesperson said.

Liberty said it has put around 10pc of staff in Europe onto temporary unemployment, but sources suggest this was as high as 80pc for some downstream sites that had insufficient HRC to process, as well as a lack of demand because of Covid-19 closures. Automotive restarts mean staff are returning to some of the sites.

The company has tried to defer receipts of raw material purchases at some plants and work with current stocks: it has pushed back especially hard on zinc, according to suppliers. It has also implemented voluntary pay cuts globally, with some staff working one day on one day off and being paid half of their salaries.

Liberty’s Newport HRC mill has one month of stock and is not rolling at present. The stock at the site has been depreciating in recent weeks given the rundown in UK prices: Argus‘ UK HRC assessment slipped by £10/t to £405/t ddp West Midlands last Thursday, down by £45/t since the start of April. Any stock financed in dollars has also been impacted by the depreciation of sterling.