Engineering news
The heads of the steel industry will meet in Sheffield today for a crisis meeting in the wake of the closure of SSI's Redcar steelworks in Teesside.
The summit will see bosses from companies such as Tata Steel meet with politicians, unions and other stakeholders in an attempt to prevent the demise of other production facilities in a sector which is dogged by global overcapacity and low prices for key products.
Dr Karl-Ulrich Köhler, chief operating officer at Tata Steel Europe, is expected to attend the meeting. Tata employs several hundred workers at steel facilities in Rotherham, South Yorkshire; Scunthorpe, North Lincolnshire, and Port Talbot, South Wales.
Gareth Stace, director of trade organisation UK Steel, said the summit was a crucial event, as steelmakers in the UK were under immense pressure. “We need action that will have a material positive impact on the sector as we cannot afford for this to be a talking shop.
“We will set out some of the things government can press ahead with now to send out a clear signal of support in the very short term. At the top of that list is a clear and unambiguous commitment to fully implement the energy intensive industries compensation package, which will go some way to rebalancing the crippling costs of electricity for British steel making firms.”
Stace said that the steel industry made a significant contribution to the UK industrial base, employing around 30,000 people, often in areas with higher-than-average unemployment. But he said that the sector was being confronted by a combination of difficult factors, including low demand, a rise in often unfairly-traded steel imports, a strong pound and uncompetitive policy costs.
In terms of unfairly traded steel imports, UK Steel said that Chinese excess steel capacity in 2014 was approximately 340 million tonnes – more than double the EU’s annual steel demand (155 million tonnes) and almost 30 times higher than the UK’s annual steel production in 2014 (12.1 million tonnes).
Chinese finished steel exports worldwide have surged by 53% from 58 million tonnes in 2013 to 89 million tonnes in 2014 and are already up 29% in the first half 2015, heading towards over 100 million tonnes this year – nearly doubling in the last two years.
UK imports of Chinese basic steel products have soared – up 23% year-on-year in the first 7 months of 2015 and up 129% compared to this period in 2013, while the price of Chinese imports has consistently been below that of the market average. For example, looking at the import prices of Chinese rebar, in 2015 they were £309 compared to an average of £322. As well as the depressing effect on pricing, these imports are not fair, with such imports benefitting from national subsidies and support, said UK Steel.
Stace said he wanted to see the UK government instigate five immediate, emergency actions to support the steel sector: 1. Fully implement the Energy Intensive Industry Compensation Package ahead of April 2016. The sector is currently still paying 70% of the policy costs that the full Package aims to address 2. Continue to back EU-level action on anti-dumping measures which support the UK steel sector against the rapid rise in global imports and push the European Commission to speed up its investigation process and action 3. Bring Business Rates for capital intensive firms in line with their competitors in France and Germany, by removing plant and machinery from business rate calculations 4. Don’t gold plate regulations unfairly and deliver pragmatic implementation of regulatory frameworks vital to the sector on a realistic timetable (e.g. Industrial Emissions Directive). 5. Support local content in major construction projects: British steel must have every opportunity to be at the heart of HS2 – the Government must look to unlock the significant opportunities for the steel sector and to strengthen supply chains on this and other major projects.