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UK steelmakers appeal for help as threat of closures looms

Britain’s steelmakers are urging the government to rescue the industry from a “perfect storm” that has pushed one of the UK’s largest steelworks to the edge of closure. UK Steel, the industry lobby group, said its members were facing their most difficult situation since privatisation 27 years ago after battling cheap imports, which are pushing down prices to unsustainable levels. The threatened closure of the largest steelworks on Teesside has sent shockwaves through the industry, leading unions and employers to call on the government for extra support.

In advance of a meeting in London, the industry body said ministers needed to give steel firms “half a chance” by cutting green taxes and banning cheap imports, “allowing it to compete on a level playing field with other steel-producing nations”.

The plea for government intervention comes as chancellor George Osborne continues to tour China, where figures showed local factory activity shrinking at its fastest pace in six and a half years in September, adding to a sense of gloom over the prospects for the world economy. The news sent Chinese stock markets down and will add to the concerns of global investors already fretting about the spillover effects of China’s slowdown.

Preliminary figures from financial publisher Caixin’s closely watched purchasing managers’ index (PMI) showed that manufacturing had slowed for the seventh consecutive month.

China is the world’s biggest trader in goods, so lower demand for its products is expected to drive prices down further. Poor manufacturing figures from the US heightened concerns that the global slowdown is rippling out to developed markets.

UK Steel said the beleaguered sector, which employs 30,000 people, often in areas with higher than average unemployment, was struggling to cope with falling prices, made worse by the recent strengthening of the pound. Prices of rolled steel have climbed in recent months but remain well below levels seen last year.

At the weekend, the business minister, Anna Soubry, said she was aware of the threat to the industry from dumping by rival producers and high energy costs. “We help with energy costs and recently voted to protect our steel industry from Chinese dumping,” she said. Soubry, who is in north-west China with the chancellor, said she would raise the issue of steel dumping with Beijing.

The owners of the works in Teesside, SSI, have announced a “pause” in iron and steelmaking, as well as the mothballing of one of its coke ovens. The Thai-owned firm is struggling to pay outstanding debts to its parent company dating back to a buyout from previous owner Corus, leading to speculation about how long it could keep going while employing 2,000 staff and 1,000 contractors.

UK Steel said: “As well as battling against falling prices, a rise in unfairly traded steel imports and a persistently strong pound, the sector is being hit by disproportionate policy and business costs, higher than those faced by both global and European competitors. These costs include an additional £130m a year to energy prices by climate change policies that make the UK steel sector’s energy costs up to double those of French and German plants,” it said.

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“At the same time, business rates in the UK are up to 10 times higher, while new air emissions limits from the EU industrial emissions directive will add another £500m to costs by 2020.”

Gareth Stace, director of UK Steel, said: “If the sector is to continue its vital role supplying the rest of manufacturing, then we simply cannot afford to stand by. Government has within its power the gift to take immediate steps which can alleviate pressure in the short term.”


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