- Tuesday, October 08, 2024
The global market has an excess of 543 million tonnes of steel, which is 70 times more than the country’s annual usage.
By: Pramod Thomas
THE UK steel industry has urged the government to introduce new protectionist trade measures to safeguard its future, warning of a potential crisis when existing safeguards expire in 2026, reported the Guardian.
UK Steel, an industry lobby group, has voiced concerns about an oversupply of steel in the global market, largely driven by China, which could overwhelm the domestic steel sector if no action is taken.
According to UK Steel, the global market has an excess of 543 million tonnes of steel, which is 70 times more than the country’s annual usage. This surplus is being fuelled by a downturn in China’s steel industry, which is struggling due to a prolonged crisis in the country’s property sector.
As a result, Chinese steel demand has plummeted, leading to a surplus that is driving down prices across international markets.
In response, UK Steel’s director general, Gareth Stace, has called for a balance between the country’s international trade obligations and the need to protect its domestic steel industry. He stressed the importance of protecting recent investments in the sector, warning that they could be in vain without further government intervention.
Currently, the UK has steel safeguards in place, introduced in 2018 to prevent an influx of cheap Chinese steel after the US imposed tariffs under president Trump. These safeguards, however, are set to expire in 2026, and there is uncertainty over whether they will be extended under World Trade Organization rules.
UK Steel urged the government to consider extending these protections or introducing new measures, such as tariffs on steel imports that exceed a certain level.
Russell Codling, Tata Steel’s UK marketing and business development director, highlighted the impact of the Chinese oversupply, describing it as a major challenge that existing trade protection measures are insufficient to handle.
While lower steel prices benefit sectors like construction and infrastructure, maintaining a strong domestic steel industry is seen as crucial for the country’s industrial and geopolitical standing.
The government has committed £500 million towards helping Tata Steel transition to cleaner electric arc furnaces, following the closure of its last blast furnace in Port Talbot, which led to 1,900 job losses. British Steel, owned by Chinese investors, is also in talks for state support to transition to greener technologies.
According to UK Steel, the country could impose tariffs or adopt carbon border adjustments to level the playing field and protect the domestic industry from the ongoing global glut.
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