The Government has been incredibly bold in its approach to trade, and we look forward to continuing our work with officials to address outstanding challenges facing the UK steel sector.
While the announced trade measure is a game-changer, continued progress on industrial electricity prices, an effective carbon border policy, and a strengthened procurement policy will be required to harness growth opportunities.
Trade policies
The trade measures announced in today’s Steel Strategy represent a transformation in the UK Government’s pursuit of a sustainable steel sector that is attractive to private investors.
The headline cuts to import quotas go even further than similar measures taken in the US, Canada and EU, and make clear that the Government recognises the distortions that overcapacity and extreme subsidy have created in global steel markets.
Domestic steelmakers have seen their share of UK steel demand slump to just 30 per cent as a continuous flow of subsidised steel floods into international markets and undercuts domestic producers.
The Government has recognised that in a time of growing geopolitical risk and repeated disruption to global trade, it is clear the UK must domesticate more of its critical supply chains to increase its resilience.
The UK cannot afford to be dependent on imports for the steel we need for our national security in areas including defence, grid infrastructure and civil nuclear.
UK Steel also welcomes the Government’s expansion of trade defence to aid our producers of bright bar, non-alloy wire, and stainless steel.
The UK has tragically lost several important companies in these sectors, and the new measures will not only stem that loss of capability and jobs but also encourage investment and expansion.
More must be done to protect our customers as they face the same threats from subsidised manufactured products as we do, and we are happy to support that effort.
Procurement
The Government has implemented a range of measures to enhance public procurement, such as refining the Public Procurement Notice for steel.
The industry maintains ongoing collaboration with the Government to advance procurement policy improvements.
Energy prices
UK steelmakers face industrial electricity prices 14 per cent higher than in Germany and 25 per cent higher than in France.
While the Government increased compensation for electricity network charges in the Industrial Strategy, the Steel Strategy does not contain any new initiatives to deliver competitive industrial power prices.
Without further action, persistently high electricity prices will continue to impact the sector’s competitiveness and the UK’s ambition to invest in a sustainable, low-carbon steel industry.
UK Carbon Border Adjustment Mechanism (UK CBAM)
UK Steel warns that the UK CBAM risks making importing Chinese steel cheaper than producing lower-emission steel locally.
The HMT-led policy also covers a narrow range of products, so importers can avoid the UK CBAM by switching to finished or semi-finished steel-containing goods not included in its scope.
Finally, the increased carbon costs will make UK steelmakers uncompetitive in non-EU markets, without an export solution. These issues risk favouring imports over domestic production instead of creating a fair market.
While the progress made to support the sector is encouraging, significant challenges remain.
Resolving carbon border policy and delivering competitive industrial energy prices will be critical and require action from the Treasury and DESNZ to secure the long-term future of the UK steel sector.
On the Steel Strategy, Gareth Stace, Director General, UK Steel, said: “We welcome the Government’s Steel Strategy as a vital step towards securing a competitive, resilient future for one of the UK’s most strategically important industries.
“This is a significant moment, and Government ministers deserve recognition for their leadership today.
“The Government’s bravery in taking the required measures represents a real shift in the culture of Westminster from protecting the ideology of free trade at any cost, to defending critical industries and national security.
“Steel underpins our national security, our energy transition, and the delivery of critical infrastructure. Yet for too long, the UK has lacked a coherent, long term plan to support the sector.
“Today’s strategy acknowledges the essential role steel plays in every part of the economy and sets out the direction needed to attract investment, boost innovation, and strengthen our industrial foundations.
“This is a crucial moment: with global markets distorted by overcapacity and subsidy, a clear and ambitious domestic strategy is exactly what is required to ensure steelmaking not only survives in the UK but thrives.”
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