Insight: UK, EU steel welcome Brextension; hope for deal

UK and European Union steel industry associations Thursday welcomed the announcement of a six-month plus delay to the UK leaving the EU, considering any increased chance of striking a withdrawal deal as positive for the sector. Nonetheless, the prolonged period of uncertainty was viewed as a potential drain on the sector’s decision-making capacity.

ISTA, the UK-based International Steel Trade Association, struck a positive note. “ISTA is pleased that the EU and UK seem in agreement about the next step regarding Brexit. However, the sooner a mutually agreed and nationally supported decision is taken, the better,” said Brian Paterson, the association’s chairman.

Confederation of British Industry President John Allan was cited in UK media as saying the extension to October 31 has met mixed reaction from businesses, as many companies have already invested funds in preparation for a no-deal scenario. Small businesses in particular are reportedly having difficulty in planning for unforeseeable circumstances amid changes in the Brexit deadline.

The European Council late Wednesday offered a flexible extension to the UK until end-October to leave the EU, replacing the previous April 12 deadline. The extension, which increases the possibility of approval of a deal governing political, trade and regulatory matters, was accepted by UK Ambassador to the EU, Sir Tim Barrow Thursday.

In response to the extension, Gareth Stace, director general of UK Steel, the trade association for UK steelmakers and downstream processors, said: “For the second time in a matter of weeks, the UK came perilously close to a cliff-edge no-deal Brexit. UK Steel is pleased that the EU has further delayed this disaster, it is now incumbent on all sides of the Brexit debate to ensure that we do not come that close again.

“Any Brexit which limits free and frictionless trade is a bad Brexit for the steel sector, and until last night we were heading for just that. The UK steel industry sends 70% of our exports to Europe, so anything less than frictionless trade would be a step in the wrong direction.”

In 2018, a total of GBP 3.5 billion ($4.6 billion) worth of iron, steel, aluminum and other base metals were imported into the UK, according to the UK Department of Trade. Of this, GBP 1.49 billion worth was iron and steel, GBP 1.4 billion worth was aluminum and aluminum products, and GBP 606.14 million was base metals and base metal products, it said.