The UK steel industry has been grabbing the news headlines, but for the wrong reasons.
The industry has seen substantial job cuts and losses as a result of large company failures within the sector. Almost 18,000 people are employed in the steel sector, and some experts say that up to one in four of these jobs could be at risk over the next few years.
The steel industry has been hit by a combination of factors: high UK energy prices, the extra cost of climate change policies and competition from China – all contributing to the collapse in UK steel prices.
Demand for steel worldwide has not returned to the levels seen before the financial crisis. As many countries, and particularly China, are seeing weak growth, global demand has been sluggish and Global steel prices have fallen sharply. Meanwhile, China’s own economic slowdown has led its producers to look for export markets as their home demand stalls. As a result, UK imports of Chinese steel have increased dramatically. While it is true that the UK’s steel imports from the rest of the EU are much higher, China is selling its steel at much lower prices. Steel imports into the UK from the rest of the EU cost on average €897 a tonne, while Chinese steel imports for the same period were just €583 a tonne, according to Eurostat.
High UK energy costs for energy-intensive businesses like steel production are also a factor, added to by the extra cost of climate change policies. The industry continues to look for additional support from the British Government however EU rules restrict how much support governments can give to particular industries. Member states may not use public funds to rescue failing steelmakers but EU countries are allowed to boost steel firms’ global competitiveness – for instance by funding research and development or helping with high energy bills.
If the industry was to shrink further there will be an impact in other allied sectors – steel processors, distributors, scrap metal dealers, metal traders and other metal product manufacturers. Many argue that this is not just a crisis for the steel sector, but one affecting UK manufacturing in general which accounts for roughly 10% of UK economic output.
The peace of mind that Credit Insurance provides, together with a gateway to skilled risk analysts who specialise in steel and other metals, could prove an invaluable addition to your existing credit management processes. The access to up to date credit information from both within the UK and overseas always ensures that you are trading not only on reputation, but with the knowledge that insurers know and have met with your major customers.
Acumen Credit Insurance Brokers has the knowledge and expertise to tailor products to meet your individual needs, recommend the most appropriate insurer and address those issues which affect businesses trading within the Steel Sector.