EUROPEAN STEEL DAY 2019: UK steel industry ‘likely to be obliterated’ by no-deal Brexit

European steelmakers voiced their concerns over the future viability of the UK steel industry, should the UK leave the European Union on October 31 without a deal, at the European Steel association’s (Eurofer) European Steel Day in Brussels on Wednesday June 26.

A “no deal” Brexit would mean the UK would leave the EU, and all related agreements and bodies, without a transition period. No preferential tariffs would be in place for UK exports to anywhere in the world.

“We operate in the UK, and the biggest concern is that as soon as the UK is out of the European Union, the [EU steel import] safeguards will not be in place and they would revert back to WTO rules,” Roeland Baan, chief executive officer of Finnish stainless steelmaker Outokumpu, said at a press conference during the event.

“This means, that for many [steel] products, there will be no protection whatsoever, and the chance that the UK steel industry will be obliterated is not small,” Baan said.

Outokumpu’s UK operations consist of a stainless steel meltshop with a 450,000-tonne-per-year capacity as well as a 25,000-tpy capacity rolling mill for stainless bar and wire rod in Sheffield, in northern England.

An "unfavorable no-deal or hard Brexit scenario may have a significant adverse impact on Outokumpu’s overall business and access to financial markets," the steelmaker said in its 2018 annual report.

“It is important to say that the UK government supports our requests to improve the EU import safeguard measures. That stance in the short term will help the British steel industry,” Eurofer director general Axel Eggert said.

Concerns about the future of the UK steel industry have been amplified after UK long steelmaker British Steel was put into compulsory liquidation following an order from the UK High Court on May 22.

The company was buffeted by a number of issues, including uncertainty about the UK’s exit process from the EU (Brexit) and a slump in order volumes, as well as rising costs for raw materials.

UK and European steel market participants have repeatedly called for the European Union and the United Kingdom to reach an agreement and avoid continued market uncertainty after the UK was granted a six-month extension to delay Brexit until Thursday October 31.

Viral Shah

viral.shah@fastmarkets.com

Published

Viral Shah

June 27, 2019

12:22 GMT

London