The UK steel industry is navigating turbulent waters, marked by fierce international competition, excess global supply, and high domestic production costs. In 2023, the industry contributed £2.3 billion in gross value added, representing only 0.1% of the total UK economic output. Despite this modest contribution, steel remains a crucial element of the manufacturing sector, directly supporting 40,000 jobs across 1,160 businesses in the UK. The current landscape reflects the complexity of a sector grappling with declining global prices and pressing demands for modernization.
As of 2023, the UK produced 5.6 million metric tons of crude steel, accounting for 0.3% of the world’s total output. In stark contrast, China dominated global production with 1,019 million metric tons, making up 54% of the total. Within the European Union, the UK ranks as the eighth-largest steel producer, trailing countries like Germany, Italy, and Spain. This disparity underscores the urgency for the UK steel industry to enhance its competitiveness and adapt to a rapidly changing market.
A critical issue facing the UK steel sector is the overcapacity in the global market, which has resulted in a surplus of steel and subsequent price drops. This scenario is exacerbated by high electricity costs that UK steel manufacturers contend with, leading to calls for more robust government action. The industry advocates for measures to alleviate energy expenses, protect the domestic market, and transition to lower-carbon steel production methods. Such changes are essential not only for the industry’s survival but also for meeting environmental targets.
In response to these pressing challenges, the UK government announced on September 11, 2024, plans to implement a new steel strategy by spring 2025. This strategy aims to bolster investment, strengthen supply chains, and create more well-paid jobs in critical areas. The government is keenly aware of the need for the steel industry to transition to low-carbon production methods, which is integral to the UK’s broader commitment to achieving net-zero greenhouse gas emissions by 2050.
Significant financial resources have been earmarked for this transformation, with £2.5 billion reserved for the steel sector. In addition, £500 million has been committed for enhancements at Tata Steel's Port Talbot facility. The establishment of the National Wealth Fund (NWF), with at least £5.8 billion earmarked for investments in green steel and related technologies, reflects the government's commitment to supporting a sustainable future for the industry.
