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What’s causing the UK Steel Crisis?

If you have turned on the news over the last couple of months, you’ll almost certainly have heard something about the struggles of the UK steel industry. To some, it was accompanied with a sense of confusion. After all, was not steel one of the great industries which cemented the UK’s position as an economic heavyweight? Indeed, the demand for steel and its production saw towns like Sheffield become centres of wealth and manufacturing in the North, but steel’s stock has been falling steadily for some time now. Today, it’s in ‘crisis’, but what does that mean, and how did we get here?

Here at Custom Fittings,we rely heavily on quality steel for our our stainless steel fittings

The steel producers have their own fingers to point (more on that later), but the simplest underlying issue is simply the lack of demand for steel since the global financial crisis. The complete collapse of the world’s economy came as a surprise to most, and so the shock was even greater.

Countless building projects were cancelled as governments and businesses around the worlds put their plans on ice, which saw a significant decline in demand. Between 2008 and 2009 steel production fell by over 3 million tonnes, but the numbers of people working within the industry didn’t drop at the same level. Employment numbers did fall, but only slightly, and nowhere near as sharply as between 1998 and 2001. It is this fall in demand, combined with relatively steady numbers of people employed which has contributed to Tata Steel’s Port Talbot plant losing over £1 million per day.

The big steel producers - whilst accepting that demand has diminished - lay the blame on a number of other factors, specifically; high UK energy prices, the increased cost of climate change policies and competition from China. China has produced more steel in the last two years than the UK has since 1870, and that overproduction has led to a great deal of unrest within Europe. Complaints have been common for years now, and the European commission have launched an enquiry into the claims that China have been subsiding their steel companies in order to dump ultra-cheap Chinese steel onto the European market.

It wouldn’t be the first time that the EU and China have clashed over so-called ‘dumping’ practices, having placed an anti-dumping duties on Chinese goods in 2015, including steel, wine and solar panels. The Government have welcomed this move, and are urging to commission to speed up the report, in the hopes that it’ll stave off some of the damage being done to UK steel.

All in, the collapse of UK steel threatens over 18,000 jobs directly, but it also threatens a great deal more through the supply chain. Companies like ours which produce BSP fittings and stainless steel fittings benefit hugely from having domestic steel companies.

The industry, meanwhile, have been clear about they want. They’re urging the government to cut business rates, relax their carbon emissions targets for heavy producers, offer more compensation for high energy prices and a commitment that British steel alone will be used in major construction projects. Only time will tell whether the government capitulate on these demands, but things aren’t looking too rosy for British steel at the moment.

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