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UK steel production hits record low this year


UK steel production will be at a record low this year, the lowest since World War II, and it is hard to say if there will be a recovery in 2023, an official from Britain's International Steel Bureau of Statistics (ISSB) said.

UK steel production hits record low this year

In 2022, UK steel production is expected to fall to below 7 million tonnes of steel from 7.2 million tonnes in 2021, when the market hit the COVID-19 downturn, Steve Andrews said. commercial manager of the International Bureau of Steel Statistics (ISSB).

The fall in production this year comes amid a global decline in steel production, Andrews said. Worldsteel, the world steel association, announced on September 22 that global crude steel production fell 5.1% year-over-year between January and August to 1.25 billion tons: the only region to show an increase in production over this period , was the Middle East. in recent months, it has suffered less from rising energy prices than other regions.

In the UK, the second half of the year will be 'subdued' in terms of market demand, especially in the automotive sector, while 'runaway' inflation, currently hovering around 10% yoy, will deal a devastating blow to the impact on consumer confidence and spending, said Andrews.

The UK construction PMI is below 50 and is at its lowest level in many years, which is a constraining factor for the market, the chief executive of ISSB continued. On the other hand, a recovery in the aerospace sector is supporting the production of specialty products, while a higher oil price could support the pipe market.

Other factors weighing on the health of the UK steel sector this year are rising energy costs, which more than offset the benefits of lower raw material costs, a large price gap between Asia and Europe and higher interest rates threatening the affordability of mortgages .

ISSB data shows that in 2020 it cost just over £400 ($450.20) to produce a metric ton of long steel in an electric arc furnace in the UK, including electricity and other costs, while in August 2022 it cost around £790 pounds sterling per ton. Now, even with the UK government's price cap imposed on 21 September for the period October 2022 to March 2023, it will cost around £970/t, currently above average market prices for long products in Northern Europe.

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