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Tata Steel confirms UK job losses, blaming Chinese imports

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By Alasdair Sandford
Tata Steel confirms UK job losses, blaming Chinese imports

It reads like a list from British manufacturing’s dark days in the 1980s when job losses constantly filled news bulletins.

Maybe the price that they're selling steel at is... being subsidised, and that is really an act to destabilise industry in the UK and other countries

The Indian group Tata Steel has confirmed it is cutting 1,200 jobs, mostly in Scunthorpe and Lanarkshire – on top of more than 1,000 others already announced.

On Monday Caparo Industries went into administration, threatening 1,700 posts.

Earlier this month came news that more than 2,000 jobs would go on Teesside after steelworks owner SSI went into liquidation.

Altogether one in six jobs in Britain’s steel industry is under threat: a far cry from the days when the country dominated global steel production.

Chinese ‘dumping’ blamed

Several factors lie behind the job losses but above all industry experts cite the collapse in the price of steel – which is determined by supply and demand, not the cost of production.

From $490 (430 euros) a tonne in January this year, the price has plummeted – and despite a slight revival stands at $210 (185 euros) in October.

Tata says imports into Europe have increased massively, doubling in two years – and quadrupling from China.

Chinese “dumping” of cheap steel is partly blamed for the price fall.

“What we do know is that the prices that they’re able to sell at do undercut those in the UK. Now, obviously an element of that is a cheaper labour force; they’re able to produce things at a cheaper cost, that’s the nature of markets – they’ll be able to produce more and get a larger market share. But the sense is that maybe the price that they’re selling steel at is not actually even obtainable with their costs. It is being subsidised, and that is really an act to destabilise industry in the UK and other countries,” said CMC Markets analyst Jasper Lawler.

Tata Steel claims lack of action by the European Commission over cheap imports threatens the entire European steel industry.

Intervention ‘not the answer’

All this comes amid the state visit of Chinese President Xi Jinping to Britain.

The UK government rejects charges that it is failing to protect its industry.

Intervention it argues is not a solution, blaming global over-capacity in the steel sector which is managed at EU level.

“The EU has imposed tariffs on Chinese steel to ensure that the price of Chinese steel reaching consumers here is fair but there is a problem in this industry and we’ve got to balance the different industries and different sectors,” said the British Foreign Secretary Phillip Hammond.

The British government says other new business deals with China worth 40 billion euros will create nearly 4,000 jobs.

Small comfort perhaps to those who fear a devastating impact of widespread job cuts on towns and communities built on steel.