Count Out UK for Meaningfully Contributing to Global Steel Production…Forever?

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Will the UK’s steel production ever come back?

That depends on one’s definition of “come back,” but one thing’s for sure: the UK, which accounted for two-thirds of global production during the height of the Industrial Revolution, now only produces a paltry 12 million tons of the 1.6 billion tons of steel made globally. Capacity and jobs have both plummeted over the past four decades, and this FT video sets the context for the “Why?”

What we find interesting: high energy costs and green taxes.

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According to the EEF, a British manufacturing association, by 2020, these climate-based costs will be about 50 percent higher in the UK than in the next-closest nation (Italy). The pricing for electricity and green tax is killing steelmakers there, such as Spain-based Celsa – just as EPA regulations are doing their part to hamper US steel producers – but, at the end of the day, the UK producers still are (read: have to be) optimistic.

A glimmer of hope exists for the landscape in the UK, as analysts are expecting a 2.4% increase in European steel demand. As Stuart wrote just last week, “Contraction has stopped in southern European states and has slowed in France, with economies continuing to expand in northern Europe; taken as a whole, with the signs of an upturn in Spain, modest growth this year is not expected to falter as previous green shoots have done.”

“Most folks, though, are looking to 2015 before there is a significant recovery,” he concludes. “For now, though, steelmakers will readily settle for 2% growth, even if they are struggling to get any improvement in prices.”

But the fact remains, unless the external costs lessen (which they most likely won’t) and UK producers find how to nimbly play in new markets, looks like there’s no real resurgence in the cards for the Industrial Revolution on the Isles – at least as far as the steel industry is concerned.

Agree? Disagree? Does it matter? Let us know – comment below!

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