Steel producers Sahaviriya Steel Industries UK (SSI)’s closure of its Teesside plant has been met with concern for a shrinking market for secondary materials.
The company announced on 18 September that operations at its Redcar plant (above) would be “paused” due to “on-going issues with the supply of raw materials and services”.
The firm said Redcar Coke Ovens and the Power Station would continue to operate at a reduced level while production at South Bank Coke Ovens would cease and the plant mothballed.
SSI UK chief operating officer, Cornelius Louwrens said: “The problems within the global steel industry have been well publicised in recent weeks and our decision follows a major deterioration in steel prices affecting our business during the course of this year.
“Our parent company and other stakeholders have given great support to the business, and the decision to pause our iron and steel production has been taken reluctantly and in a scenario where no other practical options are available at present.”
Louwrens added the firm would re-evaluate and assess the situation following discussions with stakeholders, including the Government and suppliers.
The British Metal Recycling Association director general, Ian Hetherington (pictured) said he was concerned by the closure because it represented a shrinking marketplace.
“This means there are fewer opportunities for the UK to recycle its ferrous scrap metal instead of exporting the vast majority.
“If we are to actively embrace the principles of a circular economy, the UK needs to be seeking solutions to the current dearth of facilities that use scrap metal as a secondary raw material.”
Black Country Metals chairman Peter Mathews said he was not surprised at SSI’s announcement as the plant had had cash flow problems for a long time.
“We’d looked at supplying to them before but the payment terms were: ‘We’ll pay you when we can’. It wasn’t the way I was going to do business.
“There’s going to be a long period of downturn that will continue long into 2017, I would think. The offloading of cheap steel by the Chinese in the market has continued for a while and means there’s no real hope for businesses such as SSI.
The scrap industry is suffering as well as everybody else. “Steelmaking is a global business and demand for steel is going to go down and we will see casualties because of it”.
Director of UK Steel Gareth Stace said: “This is an extremely worrying development. It comes just 24 hours after the Government agreed to hold a crisis summit about the UK steel industry and this cannot happen soon enough.
“In the short-term we need a clear indication from Government that it will honour its commitment to compensate steel and other energy intensive industries from the cripplingly high cost of energy – and to do so earlier than April next year. Failure to do so could mark a potentially disastrous tipping point for the industry.”
Business minister Anna Soubry said in Parliament that she and the Chancellor would talk to the Chinese Government this week about Chinese steel being “dumped” in the European market.
Steel workers’ union, GMB called on the Government to help save the plant, saying the high pound, weak euro, high energy prices and difficult market conditions led it into jeopardy.
GMB national officer, David Hulse said: “GMB is in contact with managers running the plant. Over the past six months the unions have been trying to get support from the Government to help this plant deal with a difficult position. It is of too much strategic importance to the economy to be allowed to go under.”
Unite national officer for steel, Harish Patel said: “We will be meeting urgently with the company and assisting our members and their families through this difficult and worrying time.
“Britain’s steel industry is at crisis point due to high energy costs and difficult market conditions. The UK government needs to follow the lead of its French, Italian and German counterparts and step up support for steelmaking here in the UK as part of a wider industrial strategy to rebalance the economy.”
SSI bought the plant from Tata Steel’s mothballed Teesside Cast Products in 2011 in a deal worth £291m.