UK steel manufactures ask government to protect industry

<p>Rising competition and falling prices are creating a “perfect storm”.</p>

UK steel manufactures will ask the government to help protect the industry, it has emerged.

A combination of rising competition and falling prices is creating a "perfect storm," according to industry body UK Steel and this is causing difficulties for firms across the country.

Earlier this week, Thai-owned steel firm SSI stopped production at its plant in Teeside due to falling demand. Some 2,000 jobs at the site are now at risk.

UK Steel wants the government to relax emissions targets – which could cost the industry up to £500 million by 2019 – in order to help the industry recover. It also wants to see business rates lowered, as these can be as much as ten times higher in the UK than in countries like France and Germany where some competitors are based.

"The UK steel sector is vital to the success of manufacturing, employing 30,000 well-paid and highly skilled people, often in areas with higher-than-average unemployment," UK Steel said in a statement.

It added that the industry made a £9.5 billion contribution to the UK economy in 2013 and had a £4.9 billion export value. 

On Thursday (September 24th), UK Steel is expected to outline a number of steps that the government can take to help the industry in the short term and "demonstrate its commitment to the UK steel industry".

For example, they want to encourage the use of British-produced steel in major infrastructure projects. They would also like to see a review of energy rates for industries that are highly reliant on energy usage. A review was announced in the summer budget, but UK Steel says it should be brought forward.

Government "limited"

Following the halt in production at SSI, business minister Anna Soubry said that the UK government is "limited" in what it can do to help the plant due to strict EU rules.

On Wednesday, Stockton South MP James Wharton told the BBC: "At this stage, thing are still ongoing. Things are very difficult, I don't want to give false hope about the challenges that are before us for this company."

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.