1/18/2016

Britain'ssteelindustry:What'sgoingwrong?BBCNews

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Britain'ssteelindustry:What'sgoing
wrong?

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OneinsixjobsintheUKsteelindustryarenowatrisk
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1/18/2016

Britain'ssteelindustry:What'sgoingwrong?BBCNews

Overthepastfewmonths,onepartoftheUKeconomythesteelindustry
hasbeengrabbingthenewsheadlines,butforallthewrongreasons.
TataSteel'sannouncementofanother1,050joblossesatthefirmisjustthe
latestblowtotheindustry.
Thecutscomeontopofthe1,200jobsaxedattheIndianownedgiantjustlast
October,amidanindustrywidecull.
Aroundthesametime,Thailand'sSSIannounceditwasclosingdownitsRedcar
workswiththelossof2,200jobs,thenpartsofCaparoIndustries'steeloperations
wentintoadministrationputting1,700jobspotentiallyatrisk.
Thesteelindustrysaysithasbeenhitbyacombinationoffactors:thestrengthof
thepound,relativelyhighelectricityprices,theextracostofclimatechange
policies,andcompetitionfromChinatherehavebeenallegationsthatChinese
steelisbeingsoldintheUKatunrealisticallylowprices.

Features&Analysis

Sowhat'sthetruthofitalljustwhyaresignificantpartsofBritain'ssteelindustry
insuchtrouble?
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Britain'ssteelindustry:What'sgoingwrong?BBCNews

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What'sbehindthecurrentcrisis?
Demandforsteelworldwidehasnotreturnedtoprefinancialcrashlevels.With
economiesparticularlyChina'sstillseeingweakgrowth,globaldemandforsteel
issettoremainsluggish,fallingby1.7%in2015andrisingby0.7%in2016.
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Britain'ssteelindustry:What'sgoingwrong?BBCNews

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AstrengtheningpoundhasbeenoneofthefactorsmakingUKsteelexpensiveon
theinternationalmarkets.
Insummer2015,sterlingreachedasevenyearhighagainstabasketofcurrencies,
afterBankofEnglandGovernorMarkCarneysignalledthefirstriseininterestrates
sincethecrashcouldsoonerthanexpected.
Atthesametime,globalsteelpriceshavefallensharply.Meanwhile,China'sown
economicslowdownhasledChineseproducerstoseekexportmarketsastheir
homedemandhasstalled.

Globalvillage
Arebigcitiesbecomingmorelike
separatecountries?

Asaresult,UKimportsofChinesesteelhaveincreaseddramatically.In2014the
UKimported687,000tonnesofsteelfromChinacomparedto303,000tonnesthe
yearbefore.
ItistruethattheUK'ssteelimportsfromtherestoftheEUaremuchhigher4.7
milliontonnesin2014,butcruciallyChinaissellingitssteelatmuchlowerprices.
AccordingtoEurostat,theEU'sstatisticsagency,EUsteelimportsintotheUKcost
onaverage897eurosatonnein2014,whileChinesesteelimportswerejust583
eurosatonneleadingtoaccusationsthatitissellingatunfairlylowprices.

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Britain'ssteelindustry:What'sgoingwrong?BBCNews

Highenergycostsforenergyintensivebusinesseslikesteelproductionarealsoa
factor,saystheindustry,addedtobytheextracostofclimatechangepolicies.UK
Steel,theindustrybody,saysgovernmentpoliciestocompensatesteelcompanies
fortheseextracostshavebeencomingintooslowly.
TherearealsostrictEUrulesthatrestricthowmuchsupportgovernmentscangive
toparticularindustries.
Bumpertobumper

Howmanyjobsareatrisk?

Delhitrafficreturnstonormalafterodd
evenplan

Almost20,000peopleareemployedinthesteelsector,andmorethanoneinsix
arenoweitherlosingtheirjobsoratriskoflosingthem.
Britain'sbiggeststeelproducer,theIndianfirmTata,whichemploysaround17,000
intheUK,hasjustannouncedanother1,050joblossesinsteeloperations.
Thecutscomeontopofthe1,200jobsitalreadyaxedlastOctober,amidan
industrywidecull.

BBCWorldNewsChannel
Finder
Thenewsyoutrust.24/7.OnyourTV.

MostPopular
Read

AlsoinOctober,thecountry'ssecondlargeststeelproducer,ThaifirmSSI,saidits
RedcarworksonTeesside,wouldgointoliquidationwiththelossof2,200jobs.
Atthesametime,CaparoIndustrieswentintopartialadministration,putting1,700
jobsatpotentialrisk.
http://www.bbc.com/news/business34581945

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1/18/2016

Britain'ssteelindustry:What'sgoingwrong?BBCNews

IsitreallyallChina'sfault?
TheindustryblamescheapChineseimportsforacollapseinsteelprices.

Francein'stateofeconomic
emergency'

Wealthoftop1%'equaltoother
99%'

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Chinesesteelproducersareaccusedof"dumping"exportsintheEU

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ItiscertainlytruethatChina'sdramaticeconomicgrowthsinceliberalisationstarted
in1979hasbeenoneofthekeydriversintheglobalsteelmarket.

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p rocessors.

Itisnowtheworld'sbiggeststeelproducer,accountingforaround822million
tonnesayear.TheUK,whichproducesjust12milliontonnesayear,isaminor
playerintermsofabsoluteoutput,buthassoughttospecialiseinhighquality,high
valuesteelproducts.

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WithChina'smarketslowing,theirproducershavebeenlookingforexportmarkets,
suchastheEU.
Thishasledtoaccusationsofunfaircompetition,thatChineseproducersare
"dumping"steelproductsonoverseasmarketsthatisnotjustsellingthem
cheaply,takingadvantageoftheirlowerproductioncosts,butactuallysellingthem
ataloss.
In2015,theEUimposedantidumpingdutiesforsixmonthsonsomesteelimports
fromChinaandTaiwan.TheEUandChinahavealreadyclashedoverthealleged
dumpingofproductsrangingfromwinetosolarpanelstosteelpipes.
http://www.bbc.com/news/business34581945

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Britain'ssteelindustry:What'sgoingwrong?BBCNews

UKsteelmakershavealsoblamedhighenergycosts,greentaxesandthestrong
poundfortheirdifficulties,sayingthatcomparedtoforeigncompetitorsthecostof
makingsteelintheUKistoohigh.

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HowimportantissteelfortheUK?
Steelitselfisvitalforjustabouteverythingweuse.Whetheritisbuildings,clothes,
chemical,cars,lampsordrinkscansalldependonitatsomepoint.
Aswe'veseen,almost20,000peoplearedirectlyemployedinthesteelindustry.
GiventhetotalUKworkforceis30million,that'sjustonein1,500jobs.Butcrucially
steelisnotalabourintensiveindustryautomationandcomputerisationhasseen
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Manyarguethatthisisnotjustacrisisforthesteelsector,butoneaffectingUK
manufacturingingeneral,whichaccountsforroughly10%ofUKeconomicoutput.
Thisisbecausebesidethejoblossesalreadyannounced,therewillbeanimpactin
otheralliedsectorsonsteelprocessors,distributors,scrapmetaldealers,metal
tradersandothermetalproductmanufacturers.

Whatcanthegovernmentdo?
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Britain'ssteelindustry:What'sgoingwrong?BBCNews

Theindustryisclearwhatitneeds:lowerbusinessrates,arelaxationofcarbon
emissionstargetsforheavymanufacturers,morecompensationforhighenergy
prices,andacommitmentthatBritishsteelisusedinmajorconstructionprojects.
ThegovernmentheldasteelsummitinRotherhaminOctobertodiscusswhat
couldbedone.

GettyImages

Thegovernmentisunderpressuretodomoretosupportthesector

Itsaysithasalreadytaken"clearaction"tohelptheindustry,"throughcutting
energycosts,takingactiononimports,governmentprocurementandEUemissions
regulations,meetingkeysteelindustryasks."
ButindustrytradebodyUKSteel,saysitstillneedstodomore.
"Theworkit'sdoingtohelpusisgoodbutweneedmuchfurtheractiontakingplace
totackletheimports,thefloodofChinesesteelintotheUKandtheEuropean
economy.
"WeneedtoseegovernmentandtheEuropeanCommissiontacklingthatheadon
andquickly,"GarethStace,directorofUKSteel,toldtheBBC.

SharethisstoryAboutsharing
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