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Highlights
- Heavy industries have warned of the impending shutdown of their factories and raising prices amid surging gas prices.
- The UK government has not yet offered a cohesive plan for supporting steelmakers and other such energy-intensive industries to weather the energy crisis.
The steel industry has said that any financial loan or related support measures made by the government for aiding energy-intensive industries would be akin to ‘sticking plaster’.
The government has not provided a clear strategy on how best to support heavy industries yet, while such sectors are being impacted by soaring gas prices.
The UK business secretary, Kwasi Kwarteng, has suggested offering short term loans, discounts and other types of financial support; however, the UK’s Treasury has been reluctant to provide such measures as yet.
Heavy industries, which includes steel, paper, chemical and other such energy-intensive sectors, have already warned of impending factory closures and of the potential rise in consumer prices due to the energy crisis.
Mr Kwarteng had met industry leaders from various heavy industries last week and again on Monday. However, the UK government has not yet laid out a clear plan on how to support the sector.
The steel industry body, UK Steel, supported Mr Kwarteng plea for support from the UK chancellor Rishi Sunak. The body, however, added that short term support would put the industry at risk of shutdowns and also leave it in a hostile environment. Steelmakers have thus, also called for more long-term support for the sector.
In view of this development, let us take a look at 2 of the FTSE 100 index listed stocks from the steel and iron industry:
- Evraz PLC (LON: EVR)
Evraz is the UK based vertically integrated steel, mining and vanadium company.
The company’s H1 2021 consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 94 per cent to US$ 2,082 million, from US$ 1,073 million in H1 2020.
And, its H1 2021 EBITDA margin jumped to 33.7 per cent, compared to 21.5 per cent in H1 2020.
The rise was due to stronger steel, vanadium and coal prices. Moreover, about US$256 million of the group’s EBITDA was attributed to the company’s focus on undertaking several cost-cutting and customer-related measures.
(Image source: EODHD/Others)
Evraz’s shares were trading at GBX 578.40, down by 1.93 per cent on 12 October 2021 at 12:12 PM BST. Meanwhile, the FTSE 100 index was at 7,121.55, down by 0.35 per cent.
The company’s market cap stands at £8,603.35 million, and it has a one-year return of 62.10 per cent as of 12 October 2021.
- Glencore PLC (LON: GLEN)
Glencore is an Anglo-Swiss commodity trading and mining company operating globally. The group supplies iron ore and ferroalloy, which is mainly used for steel making.
The group recently announced its plans to be net-zero by 2050 and address its scope 3 emissions targets, which includes emissions from organisations involved in iron ore or steel processing.
(Image source: EODHD/Others)
Glencore’s shares were trading at GBX 365.80, down by 0.33 per cent on 12 October 2021 at 14:03 PM BST.
The company’s market cap stands at £ 48,709.27 million, and it has a one-year return of 111.59 per cent as of 12 October 2021.
