Corus has confirmed that it is cutting about 2,500 jobs in the UK and 3,500 jobs worldwide.
The announcement comes as the firm, like all steel firms, has seen a substantial drop in global demand for steel.
A Corus spokesman said that about 1,000 jobs will be cut in mainland Europe.
Corus, a subsidiary of Tata Steel, currently employs 24,000 in the UK and 42,000 people worldwide. The company is Europes second largest steel producer with revenues of more than £12 billion.
It is not clear what current cuts will mean for Corus recycling operations but the firm states that it will continue ongoing discussions with unions.
A spokesman confirmed that 1,000 jobs will go across south Wales as a whole and about 1,000 will go in Scunthorpe and south Yorkshire.
This is the latest setback to befall the steelmaker giant. Last October its CanRoute prices went from £95 per tonne to £10 and then to £0 per tonne. It has remained at this level ever since.
Corus also had to reduce its steel production by up to 30% last year (see MRW story).
The company said that it would make every effort to achieve the job losses through voluntary redundancies, while retaining critical skills in the business.
Chief executive Philippe Varin said: The structural changes we are proposing today have been carefully considered. They are essential for the future of the business.
The company said it would be asset restructuring its Llanwern plant and steel business at Stocksbridge.
Unite joint general secretary Derek Simpson said: Unite will not accept any compulsory redundancies. We understand that Corus are facing difficulties but before this recession Corus had been making extremely healthy profits. Our members have supported through good times and bad. Now our members expect Corus to support them. Our officials are seeking an urgent meeting with Corus to discuss ways to avoid compulsory redundancies.
The steelmaker is seeking Government aid for a rolling programme to provide new skills to its entire workforce (see MRW story).
Simpson added: This announcement brings into focus the hardship that the UKs manufacturing sector is facing. The steel makers main markets, car production and construction have been hit by the recession.
Image: Corus steel bales