The UK-based trade association UK Steel has stated that, since steel safeguards in the country will have to expire in 2026 due to World Trade Organization rules, urgent action must be taken ahead of the expiry to protect the UK steel industry from being exposed to trade diversion of global excess capacity. The association urged that trade policy in the UK must go further than it has before if industry is to have a fair chance of competing for market share.
According to UK Steel’s statement, global steel excess capacity in 2023 was estimated at 543 million mt. Capacity expansions in Southeast Asia and the Middle East are continuing at an alarming rate - these are largely state-funded, mostly for high-emission blast furnaces, and often do not correspond to domestic demand trends. Steel demand in China is also weakening, causing supply to spill over into other markets and dampen steel prices. UK Steel stated that China is expected to export 100 million mt of steel this year, which could meet the entirety of the UK’s steel demand for 13 years. China’s import share in the UK has already jumped to 68 percent in the first five months this year, from 60 percent in 2023 and 55 percent in 2022. The last time these levels of Chinese exports were seen, several UK steel plants were forced to close, and thousands of jobs were lost.
To reduce the impacts of global overcapacity on the UK industry, UK Steel recommends that trade policy options, including ones that make use of WTO exceptions, should be explored and carbon leakage and public procurement policies should be strengthened.