UK Steel has welcomed the Government's final decision on steel import quotas, describing the package as a step forward in protecting the UK's steel industry from the impacts of global overcapacity and unfairly traded imports.
UK Steel supports the overall framework and welcomes the Government's willingness to engage closely with industry throughout the process. Ministers and their officials at the Department for Business and Trade (DBT) undertook extensive discussions with UK Steel, steel producers, and downstream manufacturers, and their hard work and diligence are to be commended.
However, there are areas where the new quota has made the situation worse for UK producers, notably the final quota for galvanised steel, where DBT has more than tripled Vietnam’s allocation. The volume given to the European Union in category 28 is a major blow to wire companies, who were previously looking to ramp up production volumes. There is also a lack of reassurance that once the electric arc furnaces of Speciality Steels UK return to full production, quotas such as 12A will be reduced. UK Steel stands ready to work with the Government to alleviate these concerns.
We also await the publication of the European Union’s own trade measures to understand our level of access to their market.
UK Steel director of trade & economics, Peter Brennan, said: “The Government deserves credit for delivering a much stronger trade regime that recognises the serious threat posed by global steel overcapacity and unfair trade. In some areas, these measures will not only help safeguard UK capability, but they have already directly resulted in investment to onshore production, ramp up capacity utilisation and create new jobs across the sector. However, it is clear that there has been an opportunity missed in key areas which will leave key parts of the UK supply chain exposed to heavily subsidised imports that are currently ravaging steel industries in developed countries.”
International steel markets are under enormous pressure from the deluge of heavily subsidised steel produced at high utilisation rates in China, despite tumbling domestic demand. This dynamic is a symptom of a broader failing of the Chinese economy to shift from investment-driven production to consumption. As a result, China is flooding the world with manufactured goods to maintain growth rates and creating growing trade friction.
Retaining steelmaking capability is crucial to the UK’s sovereignty and broader manufacturing sector. For instance, galvanised steel produced by Tata Steel UK is widely used throughout the construction, automotive and manufacturing sectors. Maintaining a viable domestic capability is important not only for jobs and investment, but also for the resilience of strategic supply chains. The revised quotas also raise concerns regarding packaging steels and hollow sections.
UK Steel’s focus will now turn to ensuring remaining issues are rectified through other policy levers.