Posted on 19 Jan 2016
Union leaders have warned the government that Britain’s steel industry faces “catastrophe” unless ministers block Chinese attempts to achieve “market economy status” at the WTO later this year.
The warning came as Britain’s biggest steelmaker said it was cutting more than 1,000 jobs, prompting recriminations that the UK was failing to stand up for the steel industry in the face of a deluge of cheap Chinese imports.
Tata Steel said 750 positions would go at its Port Talbot plant, the UK’s biggest steelworks by output and workforce, along with 100 jobs at mills in Trostre, Corby and Hartlepool and 200 support roles.
The decision underlines the evisceration of Britain’s steel industry, which during the past year has either shed or outlined plans to cut more than 6,000 jobs from a workforce that was 30,000-strong at the start of 2015.
It also feeds into a roiling debate over China’s place in the global economy as Beijing pushes for market economy status at the World Trade Organisation.
In a letter to the business minister, Anna Soubry, the steelworkers’ trade union Community said that senior industry figures had warned that if China achieved this goal it would be “a catastrophe for our industry and most likely the final nail in the coffin for UK steelmaking”.
Facing a barrage of protest, the European Commission has pushed back a proposal on whether to grant the coveted status until this summer. EU states are sharply divided on the issue, with Britain in favour, and Italy strongly opposed. Critics argue that it will reduce Europe’s ability to retaliate against unfair trade practices with countervailing tariffs.
Tata said the cost-saving measures followed falls in European steel prices “caused by a flood of cheap imports, particularly from China”.
Karl Koehler, chief executive of Tata Steel’s Europe, said the European Commission needed to do more to counter the wave of “unfairly traded imports . . . Not doing so threatens the future of the entire European steel industry.”
While producers around the world have been hammered by a sharp decline in prices amid a global supply glut, UK steelmakers complain they are saddled with the additional burden of high energy costs and business rates, as well as the impact of a strong pound.
China’s steel exports have more than doubled since 2012, according to the International Steel Statistics Bureau, and it stands accused of dumping on to world markets at unfairly low prices as its domestic consumption of the metal slows. Many companies and analysts believe it subsidises lossmaking steel mills.
The unions also expressed anger at a perceived softness in the UK’s stance towards China on trade. Britain hosted President Xi Jinping on a state visit last year as the government sought improved commercial ties and Chinese investment for large infrastructure projects.
Roy Rickhuss, general secretary of Community, said everyone in the industry was clear that “unfairly traded Chinese steel is the biggest contributor to the UK steel crisis and yet the prime minister and his government are cheerleading for China in Europe.
“You can’t wring your hands over steel job losses and then shake hands with the Chinese government over cosy trade deals.”
The Department for Business, Innovation and Skills said it had taken action in a range of areas such as action on imports and by introducing compensation for environmental taxes and changing procurement guidelines.
In a Commons debate, Angela Eagle, shadow business secretary, accused the government of “warm words but very little concrete action” to protect the steel industry.
But Ms Soubry said the government had persuaded the EU to take a tougher response against dumping by China. She added: “For China to get status it must show that it can play by the rules and it must provide the evidence that it is playing by the rules.”
Gareth Stace, director of lobby group UK Steel, called on the government to reduce business rates for the Port Talbot site and consider offering grants to help it improve its long-term sustainability.
The government says that EU state aid rules bar it from offering direct financial support.
UK selling prices for hot rolled coil, a benchmark steel product manufactured at Port Talbot, have fallen from ￡305 a tonne to ￡225 over the past 12 months, according to consultants at CRU.
