UK Steel, a lobby group, said the global industry has 543m tonnes of excess steel, 70 times more than the UK uses each year, in analysis published on Monday…reports Asian Lite News
The UK steel industry has called for the government to consider further protectionist trade measures as it braces for a flood of imported steel amid a global glut driven by China.
UK Steel, a lobby group, said the global industry has 543m tonnes of excess steel, 70 times more than the UK uses each year, in analysis published on Monday. It said the UK faces a “cliff edge” in 2026 when current protections run out.
China’s steel industry is going through a brutal recession amid a years-long crisis in the country’s property industry that has dragged down domestic steel demand. In August, the chief executive of the world’s biggest steelmaker, China Baowu Steel, said the industry was going through a “harsh winter” that could be worse than the 2008 financial crisis or the 2015 crash in demand, when thousands of British steel jobs were cut. The Chinese glut has resulted in falling prices around the world.
Gareth Stace, UK Steel’s director general, said the UK needed to “balance international obligations with the national interest” and act to protect the industry, or else face the prospect of recent British investments in the steel industry being “all for naught”.
The UK currently has so-called steel safeguards in place that limit the diversion of cheap steel to Britain. They were brought in in 2018 to prevent the diversion of Chinese steel after Donald Trump imposed tariffs on imports to the US. However, the safeguards expire in 2026, and may not be extended under World Trade Organization (WTO) rules. However, the industry wants the UK to consider protecting its steel industry regardless.
Russell Codling, the director of marketing and business development in the UK for Tata Steel, said: “The scale of excess supply to the global market from China is just swamping every corner. The trade protection mechanisms that are in place aren’t sufficient to deal with these circumstances.”
Lower prices benefit steel users, including construction projects and major infrastructure. However, steel industries tend to be politically influential and the ability to produce steel domestically is also prized as an indicator of industrial strength and geopolitical power.
The UK government under the Conservatives and now Labour has committed £500m towards the switch from blast furnaces to cleaner electric arc furnaces at Tata Steel’s plant in Port Talbot, south Wales. Indian-owned Tata shut down its last blast furnace last week, with the loss of 1,900 jobs, but the government argues that its investment will help sustain a British steel industry. Chinese-owned British Steel is also trying to negotiate state support to switch to electric arc furnaces.
Deciding whether to impose protectionist measures could prove tricky for the Labour government. Other countries – notably the US – have essentially ignored the WTO, while pressure is building within the EU to push the boundaries of what the rules allow.
UK Steel argued that Britain will face greater trade diversion if it does not act. It suggested that the UK should consider imposing tariffs on steel imports above a certain level. Carbon border adjustments, which put a price on carbon emissions from dirty blast furnaces, could also help the UK industry, it said.
“Rising global excess capacity driven and sustained by non-market forces is one of the biggest challenges of our time for the global steel industry,” said Stace. “It has the potential to redraw the map of global steelmaking, as there is no longer fair competition.”