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UK steel industry: statistics and policy

Published Monday, July 11, 2016

The steel industry: statistical summary of the UK and international industry; analysis of current prospects; summary of Government policy; timeline of events.

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Late 2015 and early 2016 saw a crisis in the UK steel industry with the closure or reduction in capacity at major plants in Redcar, Scunthorpe, Scotland and South Wales.

In response, the Government introduced a number of measures to support the industry and those affected by the closures.

This note provides an overview of the scale of the industry, the recent crisis and the Government’s response to it, as well as the implications of Brexit on the industry.

The industry in 2014

  • Output totalled £2.2 billion, 0.1% of the UK total and 1% of manufacturing output
  • The value of the industry has declined by 24% since 1990
  • There were 535 businesses in the steel industry
  • These businesses employed 34,500 people
  • 54% of steel industry employees work in Yorkshire and the Humber or Wales

The international picture

International steel production

  • Total world steel production increased 96% between 2000 and 2014, mostly driven by increases in Chinese steel production
  • China produced 779 million tonnes of steel in 2013, 48% of the world total. The UK produced 12 million tonnes
  • Growth in production slowed considerably in 2014, following a fall demand for steel, particularly from China

Prospects for the UK steel industry

Some analysts have questioned the economic viability of the UK steel industry, but the Prime Minister has stated that the Government is committed to supporting this industry, which he describes as “vital”.

The recent fall in international demand for steel, combined with continuing growth in production has created a glut of steel on the international market.

This has pushed steel prices down, magnifying the comparative expense of steel produced in the UK, where overheads are higher than in some other countries.

Some analysts have questioned the economic viability of the UK steel industry, but the Prime Minister has stated that the Government is committed to supporting this industry, which he describes as “vital”.

The 2015/16 crisis

In September 2015, Sahaviriya Steel Industries (SSI) announced that they would be “mothballing” their major steel making plant in Redcar on Teesside in the North East of England.

This precipitated announcements of reductions in UK production capacity from a number of other major steel manufacturers, including Tata Steel and Caparo industries. Around 5,000 jobs have been affected by the crisis. 

In March 2016, Tata Steel announced that it was examining options to sell its UK steel operation. In May it sold its long products division employing 4,400 people. In July, the sale was put on hold while it attempted to merge the majority of its remaining operations (employing 9,000 people) with other steelmakers, but Tata said it would sell its speciality steel business (employing 2,000 people). In April 2016, the UK Government announced that it was willing to take a 25% stake in Tata’s UK operations and provide other financial support.

Commons Briefing papers CBP-7317

Author: Chris Rhodes

Topics: Economic situation, Industry, Manufacturing industries

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