Chinese 'exporting below cost of production'
Rates cut at steel plants as Tata boss urges action
Ministers will legislate for a one year relief and it will be available to any new operator provided the sites continue to be used for production of steel. They will be capped in line with state aid rules.
The move comes as Tata Steel’s chief executive says that growing demand in Europe is being undermined by cheap imports from including Chinese steel which is being exported at less than the cost of production.
Karl Koehler called on the European Commission and national governments to speed up and strengthen action against unfair trade.
Following today’s Scottish Steel Task Force meeting, Business Minister Fergus Ewing said: “The Scottish Government is acting to support the Scottish steel industry and is making every effort to attract potential buyers for the two plants.
“This relief on business rates is a powerful signal of the value we place on securing an alternative operator, and helping them to cut costs.
“It initially applies for one year, as we have already secured agreement that the ssessor will take the state of the steel industry into account for the 2017 revaluation. Together, these actions demonstrate that we are using the levers available to us.
“We continue to work constructively with Task Force partners to ensure a viable future for the plants, with action also being taken on energy costs, procurement and on environmental issues.
“To help a new operator restart operations, the Scottish Government has also invested £195,000 to keep key workers on standby to safeguard full manufacturing capability.”
Tata Steel today said surging imports into Europe exerted further pressure on margins in the last quarter.
The unprecedented market conditions, made worse by the UK’s regulatory costs and strong pound, led to announcements to reduce jobs and mothball assets in the UK – part of an ongoing transformation programme. Regulatory action on a European and national level is needed to enable the business to compete fairly.
Karl Koehler, chief executive of Tata Steel’s European operations, said: “Growing European steel demand continues to be undermined by a flood of imports into the region. Chinese steel shipments into Europe leapt more than 50% last year, while imports from Russia and South Korea jumped 25% and 30% respectively.
“The European steel association has identified that Chinese steel is being exported at prices below the cost of production.
“This unfair trade is undercutting domestic producers and harming the European steel industry which employs many thousands of people and is at the foundation of much of the region’s cutting-edge innovation.
“That’s why we are calling on the European Commission and national governments to speed up and strengthen action against unfair trade.
“This perfect storm caused the deterioration of our financial performance in the last quarter and led to us announcing restructuring in the UK where our operations also face higher regulatory costs. These changes will continue to be a core focus in a bid to improve our competitiveness and enable us to concentrate on supplying higher-value products to customers.
“Making our customers more successful is key to our long-term differentiation strategy. With another 30 new product launches this year, we are making progress.”