UK Steel has welcomed the Government’s decision to acquire Speciality Steels UK (SSUK), saying the move will provide greater certainty for the company’s workforce and help strengthen critical UK manufacturing supply chains.
The Government has decided to take control of SSUK after talks with a preferred private-sector bidder failed to produce a viable long-term solution, as we reported yesterday.
The move will provide greater security for around 1,300 employees across sites in Rotherham, Stocksbridge, Brinsworth and Wednesbury, according to UK Steel.
The trade association said the acquisition should also give customers greater confidence that SSUK is returning to regular production and will be able to fulfil new orders.
SSUK is a strategically important part of the UK’s steel industry, supplying specialist products to sectors including aerospace, defence and advanced manufacturing.
Its products include steel used in aircraft landing gear, helicopter rotors and artillery casings, while the company also supplies the oil and gas, automotive and general engineering sectors.
Restarting UK steel production
The Government’s intervention comes as SSUK works towards restoring its full production capability.
The company’s Stocksbridge, Bright Bar and Thrybergh rolling mills have remained operational throughout the liquidation process, with production being increased for hire-work.
Funding has also been provided to support the restart of SSUK’s melting operations, with its electric arc furnaces currently on track to restart in December.
The return of melting capacity would represent an important step in rebuilding the company’s ability to produce steel domestically, rather than relying on imported material.
UK Steel said increasing SSUK’s production would also help ease pressure on some of the UK’s tightest steel import quotas, particularly categories 12B and 27.
The move could therefore help improve the availability of steel for UK manufacturers at a time when global overcapacity and tighter trade measures are creating additional uncertainty around international supply chains.
The Government has set a target of increasing the proportion of UK steel demand met through domestic production from around 32% currently to between 40% and 50%.
SSUK’s return to full production could play an important role in achieving that ambition.
Gareth Stace, Director-General of UK Steel, said the Government had made the right decision in taking ownership of the business.
“This Government is once again stepping up to do what is needed for the UK steel industry,” he said.
“SSUK is already well on its way to returning to full operations and retaking its place at the heart of critical UK supply chains.
“It is crucial that the custodian of this key strategic asset is the right owner and investor, with the expertise and long-term ambition that the dedicated workforce deserve.”
Strengthening supply chain resilience
The backing from UK Steel comes at a significant time for the domestic steel industry.
UK steelmakers are facing intense international competition, high energy costs and a global market characterised by significant overcapacity.
The OECD has forecast that global steel overcapacity could reach 721 million tonnes by 2027, while China has continued to dominate global production and increase its exports.
Against this backdrop, maintaining domestic steelmaking capacity has increasingly been framed as an issue of economic resilience and national security.
Steel is a critical input for a wide range of UK industries, from automotive and construction to defence, aerospace and energy. A reduction in domestic production can increase manufacturers’ reliance on overseas suppliers and leave businesses more exposed to international price fluctuations, trade disruption and geopolitical uncertainty.
The Government has already introduced new measures designed to protect domestic steelmaking from surges in imports. From July, new tariff-rate quotas reduced the volume of steel that can enter the UK without additional tariffs, with a 50% tariff applying to imports above the relevant quota.
The measures form part of a wider effort to protect the UK’s remaining steelmaking capacity.
The Government’s decision on SSUK therefore represents another significant intervention in the sector, following its decision to bring British Steel into public ownership earlier this year.
For UK Steel, the priority now is ensuring SSUK can return to full production and that the business has the investment and expertise required to operate sustainably in the long term.
The association said the return of SSUK’s melting operations would not only support the company’s own workforce, but also provide greater resilience for manufacturers relying on specialist steel.
The UK steel industry currently produces around 2.6 million tonnes of crude steel each year, supplying approximately 32% of the country’s annual finished steel demand. It directly employs around 34,000 people and supports a further 42,000 jobs through its supply chains.
The Government’s acquisition of SSUK therefore has implications extending well beyond the individual business.
For UK manufacturers, a successful return to full production could provide greater access to domestically produced specialist steel, while reducing reliance on an increasingly volatile global market.
