Job cut announcement expected at Tata Steel today
Jasper Jolly
Tata Steel is expected to confirm as many as 3,000 job losses at its steelworks in Port Talbot today, in what would be a devastating blow to the south Wales economy.
The board of Tata Steel is thought to be meeting in India, where it is headquartered, to make a final decision, my colleague Jasper Jolly reports.
It is expected workers will be informed today at around lunchtime in the UK if the board follows through with the decision to close its blast furnaces.
Unions are braced for as many as 3,000 job losses by March. That would be a bitter blow for a town that grew up around the steelworks, but which has seen its prospects decline as it has fallen behind rivals.
The UK’s four blast furnaces are split between Tata’s Port Talbot and British Steel’s Scunthorpe, which is owned by Chinese steel company Jingye. They are under pressure to shift production away from production methods that produce inevitable carbon dioxide. Port Talbot’s two blast furnaces alone account for about 1.8% of UK emissions, contributing to the climate crisis.
Steel production is expected to continue on both sites, but both companies are expected to install electric arc furnaces, a technology that uses electricity to melt scrap steel, removing the need for the blast furnaces that dominate the landscapes of both towns and which require thousands of people to support them.
Key events
Tata’s UK operations have struggled for years to turn a profit in the brutally low margin steelmaking industry, points out Bloomberg, adding:
Mills across the continent have faced low demand for the metal due to the economic slowdown, as well as competition from Asian imports.
Cosmetics company Estée Lauder has cut its forecast for sales this financial year, blaming China’s weak economy and rising geopolitical risks in the Middle East.
In its first-quarter results, just released, Estée Lauder says it hit expectations in the last three months, but is lowering its full-year outlook to reflect “incremental external headwinds”
This reflects the slower pace of recovery in net sales and margins, the company says, adding;
In mainland China, the expected growth rate of overall prestige beauty has slowed. To reflect this trend, the Company is lowering its fiscal 2024 expectations for mainland China and Asia travel retail.
Amid this headwind, the Company continues to expect to reset retailer inventory in Asia travel retail by the end of the third quarter of fiscal 2024. This, combined with the potential risks of further business disruptions in Israel and other parts of the Middle East as well as currency headwinds, are increasing the pressure on the Company’s fiscal 2024 financial results.
Shares in Estée Lauder are down 14% in pre-market trading.
Full story; Port Talbot steelworkers braced for up to 3,000 job cuts
Jasper Jolly
The looming job cuts at Port Talbot come less than two months after the UK government said it would give Tata £500m in subsidies to help it upgrade the steelworks.
That money, though, will not cover the cost of installing a plant to make zero-emissions iron ore, which would preserve many more jobs, my colleague Jasper Jolly explains. Tata is expected to inject about £725m to help the move to greener production methods.
The scale of the job cuts first emerged last month, and bosses at Tata – which employs 8,000 people across the UK – met union representatives in London to discuss the timeframe soon after.
Thousands of jobs are also thought to be at risk at Scunthorpe. British Steel is understood to be meeting trade unions next week to discuss its plan to decarbonise, which could put as many as 2,000 jobs at risk.
Tata declined to comment directly on the plans for Port Talbot.
A spokesperson said:
“We hope to start formal consultation with our employee representatives shortly. In these discussions we will share more details about our proposals to transition to a decarbonised future for Tata Steel UK.
Back in the financial markets, shares in UK luxury carmaker Aston Martin have fallen over 10% after it cuts its sales forecast after production delays.
Aston Martin told the City this morning that the ramp up of production for its DB12 sports car was hit by supply problems, and delays to its infotainment system.
It has now cut its forecast for sales growth this year to 6,700, down from 7,000
Aston Martin’s third-quarter results also show it had halved its pre-tax loss, to £259.8m from £511.3m a year earlier.
Aston Martin’s exective chairman, Lawrence Stroll, was upbeat, saying:
“Our 110th anniversary year continues to be a fantastic one for the Company, and we are delighted with the strategic and financial progress we have made during the first nine months of 2023.
Our volumes, pricing, gross margins and EBITDA are showing strong improvement and we are delivering an accelerated industrial turnaround.
Shares in Aston Martin are down 10.9% at 193.8p, the lowest since February.
Job cut announcement expected at Tata Steel today
Jasper Jolly
Tata Steel is expected to confirm as many as 3,000 job losses at its steelworks in Port Talbot today, in what would be a devastating blow to the south Wales economy.
The board of Tata Steel is thought to be meeting in India, where it is headquartered, to make a final decision, my colleague Jasper Jolly reports.
It is expected workers will be informed today at around lunchtime in the UK if the board follows through with the decision to close its blast furnaces.
Unions are braced for as many as 3,000 job losses by March. That would be a bitter blow for a town that grew up around the steelworks, but which has seen its prospects decline as it has fallen behind rivals.
The UK’s four blast furnaces are split between Tata’s Port Talbot and British Steel’s Scunthorpe, which is owned by Chinese steel company Jingye. They are under pressure to shift production away from production methods that produce inevitable carbon dioxide. Port Talbot’s two blast furnaces alone account for about 1.8% of UK emissions, contributing to the climate crisis.
Steel production is expected to continue on both sites, but both companies are expected to install electric arc furnaces, a technology that uses electricity to melt scrap steel, removing the need for the blast furnaces that dominate the landscapes of both towns and which require thousands of people to support them.
BoE expected to leave rates on hold tomorrow
The Bank of England seems almost certain to leave UK interest rates on hold at 5.25% at noon tomorrow.
The money markets indicate that ‘no change’ is a 94% chance, with just a 6% possibility of a quarter-point hike to 5.5%.
Matthew Ryan, Head of Market Strategy at global financial services firm Ebury, says there are several reasons for the MPC to leave rates unchanged for the second meeting running.
“Since the last meeting in September, indicators of economic activity have remained less than impressive, wage growth has eased and hawk Jon Cunliffe has left the committee, with his replacement, Sarah Breeden, appearing likely to side with the doves.
“This would suggest no closer than a 6-3 vote in favour of no change. The BoE will probably strike a cautious tone on the growth outlook, and downward revisions to the GDP forecasts for 2023 and 2024 are on the cards.
Ryan says the BoE could well reiterate that further tightening is possible should inflation prove ‘persistent’, adding:
Indeed, we would not be surprised to see an upgrade to the inflation projections, which may suggest rate cuts remain a long way off.
There is some “pleasant reading” for the Bank of England in today’s manufacturing PMI report, argues Thomas Pugh, economist at RSM UK.
He says:
The weak economic environment meant that the employment index remained well below 50, although it did rise a little (46.3 to 46.4), indicating that employment growth remains weak.
What’s more, the input prices balance also remained well below 50 at 44.1, indicating that price pressures are continuing to ease. That will be complimented by the fall in the output prices balance to 48.6, suggesting that firms are cutting their prices.
Pugh also predicts that the overall UK economy probably contracted by 0.1% in Q3, but he doesn’t expect that to mark the start of a recession.
UK factory output in longest decline since 2008/09
Just in: Britain’s manufacturing downturn continued last month, as the factory sector continues to weigh on the economy.
The latest survey of purchasing managers at UK factories, just released, has confirmed that UK manufacturing contracted at the start of the final quarter – giving the Bank of England something else to ponder ahead of tomorrow’s interst rate decision.
Firms were hit by falls in output, new orders and employment in October, amid “difficult and uncertain market condition”, according to data firm S&P Global’s latest manufacturing PMI.
Production fell for the eighth successive month in October, the longest decline since 2008/09, when the financial crisis drove the world economy into recession.
Business optimism dipped to a ten-month low, encouraging firms to cut jobs for the 13th month running.
This pulled the manufacturing PMI down to 44.8 for October, below the ‘flash’ estimate of 45.2 recorded during the month, indicating that conditions worsened towards the end of last month.
That shows that activity shrank in October, but at a slower rate than September when the manufacturing PMI was 44.3 (50 points shows stagnation).
Rob Dobson, Director at S&P Global Market Intelligence, explains:
“The UK manufacturing downturn continued at the start of the final quarter of the year, meaning the factory sector remains a weight dragging on an economy already skirting with recession.
Production volumes contracted for the eighth consecutive month, the longest sequence of continual decline since 2008-09, as weak demand at home and overseas led to a further retrenchment of new order intakes. Companies are finding trading conditions difficult as they face headwinds from client destocking, market uncertainty and the impact of the cost-of-living crisis on consumer demand.
Risks to the outlook remain skewed to the downside. Business optimism dipped to a ten-month low and manufacturers’ increased belt-tightening drove cuts to employment, purchasing and inventories.
Although both input prices and output charges fell in October, this brighter inflation outlook comes at the cost of increased recession risk, being a symptom of the broader weak demand malaise.”
UK mortgage rates have dipped again today, as lenders continue to cut borrowing costs amid hopes that interest rates have peaked.
Data provider Moneyfacts reports that:
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The average 2-year fixed residential mortgage rate today is 6.29%. This is down from an average rate of 6.31% on the previous working day.
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The average 5-year fixed residential mortgage rate today is 5.86%. This is down from an average rate of 5.87% on the previous working day.
