The UK’s new finalized steel safeguard quotas, published by the Department for Business and Trade June 25, have done little to ease concern in the market, according to sources.
“It doesn’t satisfy anybody, it adds complexity, and my view is that it will destroy manufacturing companies,” Nigel Roberts, Managing Director of Megasteel Ltd., told Platts, part of S&P Global Energy.
Roberts also highlighted expectations of a difficult Q1 2027, with the addition of the UK’s Carbon Border Adjustment Mechanism adding further cost pressure on top of the safeguards. “Q1 next year will be a disaster, there will be no stocks left and only uncertainty, not enough people know about this [CBAM] at the moment,” he said.
Some of the government’s measures were less restrictive than previously proposed. There will be a 51% overall reduction across all tariff-free steel imports, instead of the proposed 60% back in March, and some commodity codes will be exempt due to a lack of domestic capacity.
“It’s better than the levels we expected, but it’s still not enough. We expect prices to go up in the UK, but as importers, we expect to take a quarter of the European quota for hot-rolled coil. The market will be gambling to buy stuff from Europe,” one UK-based distributor said.
The International Steel Trade Association also expressed disappointment in the overall safeguard package, citing limited opportunities for buyers to source products unavailable via domestic production in the UK, and that they would continue to engage with the government in hopes of a review.
“This is not a good day for the industry that they passionately believe in. They predict steel shortages and a flight to products made from steel manufactured overseas,” ISTA said in a statement.
“Whilst we support UK steel manufacturing, the UK mills are ill-prepared to service the market, both in terms of what the end users need and when and financially in terms of the provision of usual credit payment terms.”
The trade association UK Steel, meanwhile, welcomed the measures but said some of the changes were overly expansive and may leave the supply chain exposed to cheap imports. “It is vital that the UK has effective measures in place to support domestic capability, jobs and investment,” it added
“The final arrangements for galvanized steel, packaging steels, hollow sections and certain wire products leave parts of the UK steel supply chain exposed to continued import pressure.”
The group also requested additional clarity on how the measures would evolve, as UK domestic production capacity expanded.
Tata Steel UK, the sole producer of flat steel in the country, said the measures did not reflect current market dynamics and warned that this may undermine domestic production.
“A sustainable domestic steel industry depends on a policy framework that supports investment, protects jobs and provides a level playing field for UK steel producers,” Rajesh Nair, CEO of Tata Steel UK, said.
“Steel remains a strategically important foundational industry for the UK economy and wider manufacturing base. We do not believe the final quota levels published today reflect UK market conditions or the pressures facing the domestic steel industry,” he added.
Despite backlash from some producers, the UK British Chamber of Commerce said that overall changes to its planned steel tariffs were a “welcome tilt” toward the needs of the UK’s downstream steel users, “but the government is walking a precarious tightrope in trying to balance the needs of steel producers and users and its hand has been forced by the actions of other global players,” William Bain, the BCC’s Head of Trade Policy, said.
“There will still be many losers. The government has committed to review these measures in a year’s time but should act more quickly if firms face severe financial distress. We will be speaking to firms in our network to gauge the impact these revised quotas will have on costs and jobs,” he said.
Platts, part of S&P Global Energy, last assessed HRC in the UK on June 18 at GBP 705/metric ton ($931/mt) DDP West Midlands, stable week over week, but up GBP180 since the start of the year.
