Virgin steel is out of date. It’s the quality of steel that matters
Civil society organisation SteelWatch has called the ongoing argument over the UK’s need to produce “virgin steel” via blast furnaces outdated, with investment in fact needed in electric arc furnaces to produce competitive low-emission steel, Kallanish learns.
It says that following the recent government intervention in British Steel, the UK needs to “invest forward, not backward for competitive low-emissions steel”.
“This argument about ‘virgin steel’ is out of date. It’s the quality of steel that matters. In the future industry, electric arc furnaces powered with renewable electricity will provide a full spectrum of steel products, with a mix of recycled scrap and some low-emissions iron that can be bought in briquette form,” says Caroline Ashley, executive director at Steelwatch.
The organisation calls for an industrial strategy that protects jobs, cuts CO2 emissions and modernises the sector to ensure a renewable-powered and therefore competitive economy.
“Blast furnaces have been around for 300 years and a decent transition can’t happen in a matter of days. But what really matters is to use this reprieve to plan transformation of UK steelmaking to a competitive and low-emissions future. That will mean investing in electric arc furnaces and getting past the myths that preserving the UK’s steelmaking capacity is the same thing as preserving its blast furnaces – it’s not,” she adds.
SteelWatch highlights the UK’s ample scrap resources for EAF-based production, with green iron available from “long-standing trading partners like Sweden, Canada and Australia”. It also notes the US uses EAFs for 70% of its steelmaking, with 90% of new steelmaking capacity announced also being EAFs.
It disagrees with the notion that BFs are needed for quality steel, highlighting Volvo and Mercedes procuring EAF-based steel, while Sheffield Forgemasters supplies the defence industry with steel produced via this route. In France, railway operator SNCF has already entered into contracts for greener steel, made in an EAF.
To remain competitive, the UK must modernise its production infrastructure, it adds.
Ashley adds: “Emotions in the UK are high and there is a lot of confusion that, for the UK to ‘make its own steel’ it must ‘keep its own coal-based blast furnaces … UK-based electric arc furnace is just as much ‘UK steel’ as any other.”
“The economies and industries of the future, including steelmaking, will be powered by renewable energy. If Britain wants to lead, it must invest in the future, not double down on a fossil-fuels based past. A shift to green steel is not about giving up on British Steel, but upgrading it, taking workers along every step of the way,” she notes.
The organisation also notes the decline in domestic steel production started before the Paris Agreement and net zero targets were introduced.
Raw materials secured to keep British Steel BFs alight, UK govt says
Operations at British Steel were taken over by the UK government over the past weekend following failed negotiations with Chinese owner Jingye over the future of the plant.
“After intensive work over the weekend, the government has secured coke and iron ore pellet for the BFs, and is confident that there will be enough materials to keep the furnaces burning,” the UK Department for Business and Trade (DBT) said on Tuesday.
At Immingham, a major port on the east coast of England, raw materials shipped from the US have been unloaded and transported to the site “following the government settling payment for them,” the DBT said.
“The materials are enough to keep the blast furnaces running for the coming weeks, with officials continuing to work at pace to get a steady pipeline of materials to keep the fires burning,” it added.
A separate vessel with coking coal was on the way to the UK from Australia, the DBT said, adding that the cargo was “the subject of a legal dispute between British Steel and Jingye over the weekend that has now been resolved” and has been purchased using the existing DBT budget.
“It’s a huge relief that this crucial and overdue shipment of coke arrived at Immingham this morning,” Alasdair McDiarmid, assistant general secretary of trade union Community, said on April 15. “We thank the prime minister and business secretary for their decisive action to secure the raw materials required to keep the blast furnaces [in operation].”
British Steel has installed capacity for 4.3 million tonnes per year of pig iron, and four BFs. It can manufacture a wide range of long steel products, including rails, wire rod, sections and slabs.
Of the four BFs at the site, only two were still operational, but a lack of critical raw materials in stock – iron ore and coking coal – put them on the verge of a complete and potentially very costly shutdown.
If temperatures in the BF were to fall below critical levels, it could disrupt the smelting process, and result in damage to the furnace lining, blockages to inlets and outlets, and difficulties in restarting the furnace. The “cold” furnace would probably need extensive repairs before it could be reheated safely.
EAF future awaits?
Should the two operational BFs be preserved and remain in operation, thoughts will turn to the future of the Scunthorpe plant, which industry sources still expected would make the transition to become a greener and recycling-dependent electric-arc furnace (EAF) operation.
“There is now some demand for lower-emission steel, with some UK construction customers preferring to import EAF steel rather than continuing to use BF steel made in the UK,” a spokesperson for industry body UK Steel told Fastmarkets on Monday.
“Our energy costs are [among the] dearest in the world, so we will never be competitive in steel,” a major UK scrap processor said on Tuesday.
British Steel’s product mix was not sufficiently specialized to shield it from global competition, the same source said. He pointed out that Indian steelmakers can easily make large volumes of rail with lower costs for “compliance”, health and safety, and energy than in the UK.
Energy costs were also making the processing of scrap very expensive in the UK, he said, but added that British Steel moving to an EAF model would be a boon for scrap demand in northern England at a time when minimal volumes were being sold into the local market, with most UK scrap bought by export docks.
In March 2025, Jingye turned down £500 million ($661 million) in financial support, offered by the UK government, intended to support British Steel’s transition to green steel production by moving production toward the use of EAFs.
Wales-based Tata Steel accepted a similar £500 million offer in public funding from the UK government to develop a greener EAF-based steelmaking plant at Port Talbot in September 2024, with the company pledging to invest an additional £750 million.
The UK produced just 4 million tonnes of steel in 2024, down by 29% year on year from 5.6 million tonnes in 2023, ranking the country’s economy just 35th in the world as a steel producer, according to the World Steel Association.
At the same time, the UK imported 6.45 million tonnes of iron and steel products over the year, according to UK customs data cited by Global Trade Tracker.
UK government takes control of British Steel
The UK government has taken control of British Steel after the recalling of Parliament for a rare Saturday sitting on 12 April to debate its Steel Industry Bill, in a bid to keep blast furnaces alight at Scunthorpe, Kallanish reports.
The Steel Industry (Special Measures) Bill, which was approved by both parliamentary houses and became law after being granted Royal Assent, is not yet full-blown nationalisation, as ownership of the assets has not been transferred.
Jonathan Reynolds, the Secretary of State for Business and Trade, said during Saturday’s debate that the government had been negotiating in good faith with British Steel parent company Jingye. It had made a “generous” offer “that included sensible, common-sense conditions to protect the workforce, protect taxpayers’ money, and create a commercially viable company for the future,” he observed. “Despite our offer to Jingye being substantial, it wanted much more – an excessive amount, frankly.”
The offer was likely an improvement on the £500 million ($654m) believed to have been offered by government in late March, which Jingye rejected.
“However, we remained committed to negotiation, but over the past few days, it has become clear that the intention of Jingye was to refuse to purchase sufficient raw materials to keep the blast furnaces running. In fact, its intention was to cancel and refuse to pay for existing orders. The company would therefore have irrevocably and unilaterally closed down primary steelmaking at British Steel,” Reynolds added.
He also highlighted the government had offered to purchase the raw materials to keep the BFs going. However, “a counter-offer was instead made by Jingye: that we transfer hundreds of millions of pounds to it, without any conditions to prevent that money, and potentially other assets, being immediately transferred to China,” Reynolds noted.
“Jingye also refused the condition of keeping the blast furnaces maintained and in good working order,” he added.
Meanwhile, Reynolds said that if there was a transfer of ownership, the government would pay fair market value for the assets, but “in this case, the market value is effectively zero”.
He also noted that Jingye’s “intention has been to keep the downstream mills … and supply them from China, rather than from Scunthorpe.”
“A transfer of ownership to the state remains on the table. It may well, at this stage, given the behaviour of the company, be the likely option,” Reynolds continued.
However, he added that government’s “aspirations for British Steel remain a co-investment agreement with a private sector partner to secure a long-term transformation … The state cannot fund the long-term transformation of British Steel, nor would it want to.”
British Steel previously announced its transition to electric arc furnaces would cost £1.2 billion ($1.6 billion).
Gareth Stace, UK Steel director general, welcomed the new legislation. “A blast furnace is a dynamic piece of machinery. If the fires go out, it is nigh on impossible for it to be brought back to life – so a solution to keep them running is time-critical. It is, therefore, vital that the blast furnaces remain operational during negotiations, providing some security and breathing space in the short term, and this legislation will ensure this can happen,” Stace asserted.
British Steel starts consultation to close Scunthorpe BFs
British Steel says it will consult with workers and trade unions on the closure of its two blast furnaces, steelmaking operations and a reduction of steel rolling mill capacity in Scunthorpe, Kallanish learns.
It says challenging market conditions and significant ongoing financial losses have made it unsustainable to continue operating the blast furnaces and wider steelmaking operations.
It adds it will engage with ministers to seek options for support on transition to electric arc furnace steelmaking. However, this news comes the day after British Steel rejected a government funding offer, believed to be £500 million ($644m).
The steelmaker says following many months of negotiations, no agreement with government has been reached. As a result, the “difficult decision” has been made to begin a formal consultation with employees and unions from 27 March.
It adds that since 2020, British Steel owner Jingye has invested more than £1.2 billion to maintain operations amid ongoing production instability and significant financial losses of around £700,000 a day. Despite this, the blast furnaces and steelmaking operations are no longer financially sustainable due to highly challenging market conditions, the imposition of tariffs, and higher environmental costs relating to the production of high-emission steel.
The consultation will propose three options, including the closure of BFs, steelmaking operations and Scunthorpe rod mill by early June 2025, or BF and steelmaking operation closure in September. The third proposal is the BF and steelmaking operation closure at a future point beyond September.
British Steel chief executive Zengwei An says: “We understand this is an extremely difficult day for our staff, their families, and everyone associated with British Steel. But we believe this is a necessary decision given the hugely challenging circumstances the business faces.”
In its most recent financial report, the firm announced an eightfold increase in pre-tax losses, noting its ageing and high-cost assets. The company has experienced BF operational issues for some time, with losses growing yearly.
In a statement emailed to Kallanish, business and trade secretary Jonathan Reynolds says: “I know this will be a deeply worrying time for staff and, while this is British Steel’s decision, we will continue working tirelessly to reach an agreement with the company’s owners to secure its future and protect taxpayers’ money.”
He adds there is a bright future for UK steelmaking, given the government’s commitment of up to £2.5 billion to rebuild the sector, and the upcoming Plan for Steel.
The government has made clear that any offer of grant funding for the company must be the right deal for taxpayers. British Steel is said not to have met standard conditions guaranteeing respect for workers, support for the local area and ensuring the company’s long-term commercial viability.
UK Steel director general Gareth Stace called the move by British Steel a “gut punch to UK steelmaking” that will have “a profound impact felt throughout the British economy.”
“The end of steelmaking at British Steel would mean we have a major gap in capacity to meet the future demand of the nation and will be an irreparable break in the armour of national security,” he adds. “Government must get back to the negotiating table.”
UK industry minister Sarah Jones said later on Thursday that government hopes British Steel returns to negotiations, but it does not rule out nationalising the steelmaker (see separate story).
Carrie Bone UK
British Steel opens new steel profile service centre
British Steel has announced the opening of a £26 million ($31.6m) service centre at its special profiles business in Skinningrove, UK, Kallanish learns.
The site specialises in manufacturing steel profiles for the earth moving, forklift, construction, shipbuilding and mining markets. The investment will establish it as one of the leading suppliers to the forklift truck mast industry.
Its milling capability will primarily service the demanding high-reach forklift truck market. The company adds that the investment will enable the company to explore growth opportunities across the globe for its standard and bespoke forklift mast profiles, with the new warehousing and processing facility forecast to significantly increase throughput within the next two years.
“This is the largest single investment in our special profiles business for more than 30 years, demonstrating our owner’s commitment to strengthening British Steel’s position at the heart of UK manufacturing,” states Richard Napier, British Steel’s sales director for special profiles.
“The new facility also firmly establishes us as one of the world’s leading manufacturers and processors of value-added profiles for the forklift industry. Our extended range of products are designed and manufactured to exact customer requirements, with the new milling capability offering profiles with tolerances of just 0.1mm – precision few global competitors can match,” he adds.
The facility includes four new CNC lathes for turning mill rolls, three automated bandsaws for cutting stock to exact lengths, a laser measurement system for process control of every bar rolled, and a warehousing system for storing and processing material from the rolling mill. It also incorporates a 14-metre bed, milling machines.
Steel for the rolling mill at Skinningrove, including the new service centre, is manufactured in Scunthorpe.
Late last year the company also opened a £10m rail stocking facility in Scunthorpe.
Carrie Bone UK
British Steel mulls building two electric arc furnaces at Scunthorpe site
British Steel is continuing its discussions with the UK government regarding the company’s decarbonization plans and the future operations of its UK business, a company spokesperson told S&P Global Commodity on Jan. 13.
While the company did not provide additional details, local media sources familiar with government discussions indicated that the initial plans, which envisioned building one electric arc furnace at Scunthorpe and another at Teesside, have been scrapped in favor of constructing the two furnaces at the Scunthorpe, north Lincolnshire site.
British Steel was nationalized in 2019 while the government sought buyers. It was subsequently sold to the Chinese steelmaker, The Jingye Group, which pledged a GBP1.25 billion ($1.55 billion) decarbonization plan. Under the proposed plan, the company was aiming to install two electric arc furnaces—one at its headquarters in Scunthorpe and the other at its manufacturing site in Teesside.
“While progress continues, no final decisions have been made,” the company spokesperson said.
“We’re working across government in partnership with trade unions and businesses, including British Steel, to secure a green steel transition that’s right for the workforce, represents a good investment for taxpayers, and safeguards the future of the steel industry in Britain,” a spokesperson from the Department for Business and Trade said to S&P Global when reached for a comment on Jan. 13, underscoring the government’s commitment to preventing the end of steelmaking in the UK, with up to GBP2.5 billion of investment for the UK steel industry.
Currently, British Steel operates two furnaces: the Queen Anne Blast Furnace and the Queen Bess Furnace. The Queen Anne Blast Furnace was temporarily offline due to operational issues but resumed operations in late December.
British Steel’s plant in Scunthorpe is the only steelmaker in the UK that still produces crude steel after Tata Steel closed all its blast furnaces at Port Talbot in South Wales, securing Eur500 million in funds for its low-carbon transition to build its Electric Arc Furnace.
The company has been working with the government for months to secure funding for the relaunch of the site and to begin the transition from blast furnace production to electric arc furnace production, with the first EAF expected to become operational by late 2025. This would replace the 3 million mt/year blast furnaces responsible for the vast majority of the company’s CO2 emissions.
Platts, part of S&P Global Commodity Insights, assessed Hot Rolled Coil weekly (HRC) DDP West Midlands at GBP520/mt on Jan 9.
Customers drive emissions reduction, technology shift: British Steel
Customers are driving the emissions reduction efforts and technology shift by steelmakers, according to Chris Vaughan, technical director at British Steel.
“It’s important to reflect the reasons why we are shifting is a primary drive to drive down CO2 emissions, and the way that we are governed on that. It’s policy that’s driving it, it’s public perception, but the pace of change that’s really driving the removal of emissions and taking those to another level is the customer base,” he said at last week’s UK Metals Expo attended by Kallanish.
“Customers are driving the manufacturers to decarbonise as quickly, if not more quickly than the policy timescales with 2035 and net zero by 2050,” he added.
British Steel has a £1.25-billion ($1.65 billion) decarbonisation plan to shift away from blast furnaces to electric arc furnace, with planning permission for this secured in Scunthorpe and Teeside earlier this year.
Vaughan noted some of the challenges the firm is facing came from the customer base potentially switching to materials other than steel which lower emissions.
“They would consider other materials for construction, etc, if we are unable to decarbonise quickly enough to meet the aspirations of their timelines,” he said.
“The transition for us is about reduction in emissions. From a British Steel perspective and an integrated manufacturer currently, the vast majority of our emissions sit within scope 1, so when we talk to clients and customers and they’re looking at us to decarbonise their own downstream, it sits in their scope 3, but their scope 3 is our scope 1,” he added.
The move to EAF-based steelmaking makes sense for the UK, but other global locations may better suit other technologies. “There’s a set of circumstances that fit electrification for the UK and the drive towards EAF, but EAF is not the only technology and it will not be the only technology on a global scale for decarbonisation,” Vaughan observed.
“Globally, it’s got to be considered from geography, where you are in your economic cycle, what is the raw material access … where’s the infrastructure as well to allow that decarbonisation,” he continued.
Amid the UK-wide move away from blast furnaces, much of the conversation has focused on whether EAF technology will be sufficient for grades that have traditionally been produced via primary steelmaking.
“It’s been around a long time. We have domestic producers using EAF technology and have done for decades. It’s proven technology which we can capitalise on to help that shift,” he added. “All grades can be made from that [EAF] route; it’s what you feed the furnace, and the raw material input that drives that, in around working with the supply chain to achieve it as well.”
He also noted that EAF steelmaking would allow more flexibility. “Our current method within British steel on integrated production requires stability, it’s not easy to take capacity up and down … whereas the EAF allows you to respond more dynamically and flexibility to market requirements which gives the benefit to be able to tune your operation to what you’re facing from the market perspective,” Vaughan concluded.
Carrie Bone UK
British Steel bags Turkey rail contract
British Steel has won a multi-million-pound contract to supply rail to Turkey. It will deliver tens of thousands of tonnes of track for a new high-speed electric railway connecting Mersin with the cities of Adana, Osmaniye and Gaziantep.
It will help create a lower-emission transport link between Turkey’s second-largest container port and inland cities more than 150 miles away, with the project expected to reduce CO2 emissions by more than 150,000 tonnes/year, the steelmaker says.
UK Export Finance (UKEF), the UK government’s export credit agency, has underwritten €781 million ($847m) of financing to support construction of the 286km railway.
“This is the start of what we expect to be a new unique partnership between British Steel, UKEF and international contractors,” British Steel commercial director – rail Craig Harvey says in a note sent to Kallanish. “The ability to combine world-leading quality rail with a world-leading finance solution for supply into global markets and networks is an unparalleled supply chain solution. Looking forward, we are very excited about what this will achieve.”
The first shipments of rail will be transported from British Steel to Turkey in the second quarter. It is manufactured in Scunthorpe and is 60E1 in grade R260, each at 36 metres in length.
Adam Smith Poland
British Steel production glitch sparks delivery delays
UK longs producer British Steel is delaying deliveries because of a problem with one of its blast furnaces, according to market sources.
The company has moved to one blast furnace, from two, because it is struggling to make pig iron of sufficient quality, the sources said. There are some suggestions that this could be caused by problems with a batch of imported coke. The company recently took its coking ovens off line with a view to reducing its carbon footprint — and the amount of emissions allowances it needs to buy — and has been importing coke since.
“We are taking decisive action to minimise the potential impact on customers’ orders caused by a production issue,” a company spokesperson told Argus. The spokesperson refused to comment further on the nature of the problem or how many blast furnaces are operating.
The company’s sales director has been ringing customers to inform them that deliveries could slip by 3-4 weeks as a result of the issue, multiple large domestic customers of the mill told Argus.
There are also suggestions that the company has insufficient gas for both its sections and wire rod mills, according to workers at the site and sources close to the company. The spokesperson refused to comment.
Senior officials from British Steel recently met with the head of Liberty Steel, Sanjeev Gupta, in Scunthorpe. It is unclear what was discussed, but sources said one topic could have been gas availability for Liberty Merchant Bar, the site previously operated on coke oven offgases from British Steel.
Others said the discussions could have been centred on state aid in light of the government’s £500mn grant to Tata Steel to help it decarbonise its operations. British Steel also has been in talks with the government and is looking to establish electric arc furnaces to reduce the carbon intensity of its production.
Source: argusmedia.com
