Liberty Steel's hot-dip galvanizing (HDG) lines in Liège-Dudelange in Belgium and Luxembourg are asking customers to prepay ordered galvanizing volumes in exchange for a discount as the company seeks to generate cash to support production.
A major supplier of hot rolled coils, which are then rolled into cold rolled sheets and galvanized, ArcelorMittal has begun demanding prepayments from Liberty Steel, given the company's financial troubles following its major lender, Greensill Capital, filed for bankruptcy this month.
The Liège-Dudelange plant is "not affiliated with Greensill at all," Liberty Steel said in a note to customers, but the bank's collapse prevented the group from supporting cash-line needs for the galvanizing lines.
In one of the letters to customers, the company offered a 4% discount per year in exchange for an advance payment.
Some clients began to work very discreetly with Liege-Dudelange after some shipments were delayed and businesses threatened to terminate contracts. Many of them refused to take risks and tried to buy galvanized elsewhere, although this was not easy in a limited market.
Previously it was reported that ArcelorMittal has discontinued its no-prepayment hot rolled coil (HRC) supplies to the UK's Liberty Steel galvanizing line in Europe, as many of the group's other suppliers are also cutting their supplies due to financial problems at the company.