Tata steel plans to sell UK plant due to excess cheap steel pumped in from China
The Indian steel giant, Tata steel soon plans to sell its plant in Northern England, as the UK industry has been struggling under cheap steel pumped in from China, which has depressed prices. The slow death of Britain’s steel industry may have been decided in India, but it was scripted in Beijing.
In the past 18 months, China has flooded the market with cheap, subsidised steel as its economic growth has slowed. Beijing wants to grab whatever foreign cash it can on global markets by selling its products at a knockdown rate.
Tata Steel, owned by the Indian conglomerate Tata Group, has been hammered by a toxic cocktail of high green taxes on emissions, a strong pound, slowing demand and cheap Chinese competition. In all probability, the sale of Scunthorpe plant in North Lincolnshire will take place by April next year.
The UK’s Department for Business is understood to be trying to attract buyers with a promise of long-term supply contracts, including a deal to feed Network Rail with steel for its multi-billion-pound overhaul of the railways.
The pace at which China has pumped steel into export markets has accelerated again this year: September was a record month in which it exported 11.5m tonnes, almost as much as Britain’s total annual steel production. It puts China on course to report steel exports of about 110m tonnes by the end of this year.
There is also evidence that this lower quality Chinese steel is being snapped up by bargain-hunting British users, as imports of Chinese steel into the UK have quadrupled from 2% to 8% in the past three years. The glut of discounted metal has virtually halved the steel price in the past 12 months.
But the chances of a rescue that would keep open Scunthorpe’s two blast furnaces — preserving the site as one of just two in Britain capable of turning iron ore into steel.