The government must do more to combat the flood of cheap steel coming from China, the director of sector trade body UK Steel has warned, after it was revealed China's planned cuts will not remove an on-going supply glut.
“This puts into stark focus the need for the UK government to work with Brussels in helping speeding up the current European Commission investigation into the dumping of Chinese hot rolled steel,” said director of UK Steel Gareth Stace. “The problem of massive Chinese over production is not going away in the short term and therefore trade defence action is our only option.”
China has warned that the steel industry is going to remain over supplied even after the sector has gone through its planned restructuring.
Cuts are expected to reduce China’s annual steel capacity to about 1.1bn tonnes by 2020 though domestic consumption is unlikely to exceed 700m tonnes, Luo Tiejun, an official with China’s industry ministry said at a conference this weekend.
However, Luo warned that an additional 200m tonnes needed to be cut to balance the sector. China is currently exporting around 100m tonnes of steel a year.
“I urged China to accelerate its efforts to reduce levels of steel production,” Philip Hammond, UK foreign secretary, said after a meeting with his Chinese counterpart in Beijing.
Indian steel conglomerate Tata has said it will shutter its UK operations if no buyer can be found, and is currently negotiating with the government and potential bidders over its Port Talbot steel plant. Commodity trader Liberty House has emerged as a potential bidder for parts of Tata’s UK steelworks, thought to be losing almost £1m per day.
The sale of Tata’s Scunthorpe plant to Greybull Capital is expected to be finalised this week.