London, Nov 8 (IANS) Tata Steel was on Sunday reported to have written to its suppliers asking for an immediate 10 percent reduction in their prices, as part of a longer term cut of 30 percent.
“We are seeking a long-term price reduction of 30 percent… on all purchases. As a first step we would appreciate an immediate price reduction of 10 percent,” the letter said, according to Britain’s Sunday Telegraph newspaper.
The report said the letter was signed by the procurement director of Tata Steel Long Products
“We greatly appreciate your support but also want to stress that we require contribution from all of our suppliers.
“Should you – for any reason – be unable to support us in our efforts, we will need to fully consider other options,” the letter reportedly said.
With the British steel industry in deep crisis, Caparo Industries, led by Indian-origin British peer Swraj Paul, was last month reported to be on the brink of going into administration as a fallout.
Quoting sources, the Daily Telegraph here reported that the steel and engineering products major founded by Lord Paul, which was considering funding options over the weekend, could go into administration as parts of its business have been under enormous pressure.
The report said legal advisers and potential administrators are on standby and that the firm of Pricewaterhouse Coopers (PwC) would be given the lead mandate for administration work.
Caparo reported an annual operating loss of 700,000 pounds for 2014 as compared with the previous year’s profit of 3.1 million pounds. Its Britain operations posted much higher losses at 2.5 million pounds, compared with the 1.7 million pounds profit made the year before.
Britain’s steel industry has fallen into deep crisis due to cheap Chinese imports, higher energy costs and the current strength of the pound sterling.
Losses at the largest steelmaker, Tata Steel, have forced it to announce 700 job cuts in Yorkshire and several hundred layoffs at its South Wales plant. The company’s losses doubled last year to 768 million pounds.
In early October, Sahaviriya Steel Industries UK went into liquidation after it announced closure of its plant in Redcar, resulting in 1,700 job losses.
A combination of international price of steel plummeting within a year from about $500 a tonne to around $280 and the flood of Chinese steel had a damaging impact on Britain’s steel industry.