You don’t have to be personally involved to be aware that the UK steel industry is going through a major existential crisis at the moment with regular news stories of job losses and steel companies going into liquidation.
As a British-owned and UK-based company specialising in high-strength safety critical steel products for the aerospace and automotive industries, Aerocom Metals has expertise and experience when it comes to assessing the problems currently being faced.
We pride ourselves on our place in the UK steel market, using predominantly home-produced steel for our range of products, which includes steel tubes, plate and bars as well as high-strength alloys and stainless steels. This means we’re well positioned to judge the market and assess the current crisis.
The problems currently faced by the UK steel industry stems from the Chinese economic slowdown. For years the rapid growth of the Chinese economy and associated construction projects have used pieces of steel the Chinese industry could produce and more besides, but that’s now ended. With the decline seemingly set in for the long run, Chinese manufacturers have taken to flooding the world export market with reduced price steel that they can’t sell in China.
According to the World Steel Association, China’s demand for steel dropped by 3.5% in 2015 and the falls are continuing into 2016. The result is that steel manufacturers around the world have been forced to shut plants unable to compete with this cheap steel, which has resulted in as many as 40,000 jobs lost across Europe alone in recent years.
To prevent this action, known as dumping, that the EU has introduced rules to prevent Chinese firms selling below cost in the EU; that is selling the steel for less than it costs to produce and export. However, many in the European steel industry don’t think the action has gone far enough.
The EU action that’s been announced is a levy of between 9.2% and 13% on reinforced steel bar ‘rebar’ products but this still represents a ‘reasonable profit level’ for the importers of 1.65%. It’s this low level of action that worries many stakeholders in the European steel industry.
The action taken falls into a context that has seen Chinese manufacturers accounting for 45% of the UK rebar market up from zero in just four years. With this massive increase in market share it’s hardly surprising that the scale of job losses in the UK steel industry has been so great.
One of the biggest manufacturers of rebar in the UK is Celsa Steel UK based in Cardiff. Whilst applauding the EU action, the managing director has been critical of the level at which it’s been set, suggesting that the duty was significantly below what he’d expect for such a ‘flagrant disregard’ of fair trading practices. He also called on the UK construction sector to ensure a sustainable supply chain of home-produced steel in the future by avoiding cheap imports in the short term.
He’s not alone in his concern. The EU action falls far short of that taken by the US, and EU steel manufacturers have had to wait almost a year for any action to be taken at all. The consequences of this inaction are plain to see: more than 5000 jobs have been lost from British Steel manufacturers since the crisis began and with a less supportive tax regime, the UK has lost out even further compared to other EU countries.
All is not doom and gloom in the UK steel industry however. Whilst the major steel producers are struggling, some parts of the sector continue to flourish with niche producers in particular leading the way. Among these is Aerocom Metals. With our UK-produced raw materials available at lower cost, our high-strength steel roll bars and aircraft interior structures have never been more competitive.
Operating from our Coventry storage facility, Aerocom maintain a dynamic stock range of ready-milled precision steel components available to buy off-the-shelf or alternatively we can custom cut our metal sheets and tubes to your desired specification.
To find out more about Aerocom and how we sit within the UK steel industry, contact us online today.