UK Ambassador to China: Steel crisis the result of a ‘sad story’ –

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Second, in the post-financial crisis era, recovery stays weak and demand remains scarce in most of the economies. Steel overcapacity thus becomes an acute issue worldwide and steelmakers, wherever they are, face similar difficulties. The UK is not alone. Steel companies in Europe, China and beyond are all trapped in the same predicament.

Third, the price of steel production, including energy, labour and environmental costs, is rather high here in the UK. In face of fierce global competition, British companies in general are less competitive and less profitable in the field of ordinary and low-end steel production.

Steel imported from China, amounts of which are very limited, has little to do with the predicament of the UK’s steel industry. In both volume and value, steel from China makes up only a fraction of the UK’s total steel imports.  In 2015, for example, of the UK’s 6.66m tons of imports, only 11pc, or 760,000 tons, were from China. If put in value, that was $457m, only 7.6pc of the $5.98bn total. 

Moreover, steel products from China are mostly low value-added, such as ordinary steel rods and plates, which Britain no longer makes and would have to import from other countries anyway. 

Therefore, imports from China have no impact upon the British steel market. On the contrary, by importing steels from China, the auto, machinery, construction and other British industries have effectively lowered their costs and increased their profit margin. And imports from China are not “dumping”, as some claim.

The Chinese steel manufacturers have followed market rules strictly when exporting to Britain. Like their British counterparts, steelmakers in China are also in difficulty.  But unlike in Britain, the situation in China is even more serious and challenging.

Over the past three years, China has reduced steel capacity by 90m tons. In 2015, for the first time in nearly 30 years, China’s crude steel production fell by 2.3pc year on year. In the coming five years, China is going to cut its crude steel capacity by 100m-150m tons.  This new round of reductions will result in several million lay-offs and relocations of steelworkers, far outnumbering those in the UK. 

UK Ambassador to China: Steel crisis the result of a ‘sad story’ –