UK steel industry: statistics and policy

A combination of fierce international competition, global steel supply exceeding demand, and high domestic costs has made many UK steel plants struggle to be competitive in a global market. Decarbonisation of steel manufacturing in the UK requires large investment. Restructuring of steel mills is putting pressure on jobs, while highlighting the need for government strategy and policy.

This briefing outlines the scale of the UK steel industry, issues facing the sector in recent years and government policy on the sector.

It includes information on the developments concerning the potential closure of British Steel’s blast furnaces in Scunthorpe (section 6.3).

The industry in 2024

In 2024 the UK steel industry contributed £1.7 billion to the UK economy in terms of gross value added (GVA). This was equivalent to 0.1% of total UK economic output and 0.8% of manufacturing output.

There are 1,145 businesses in the UK steel industry, directly supporting 37,000 jobs across the country, 0.1% of all jobs.

Considering the global output of crude steel in 2023, the UK produced 5.6 million tonnes, 0.3% of the world’s total; China produced 1,019 million tonnes, 54% of global production. The EU produced 126 million tonnes of steel, 7% of the world total. Compared with the EU countries, the UK ranked the eighth largest steel producer, after Germany, Italy, Spain, France, Austria, Poland and Belgium.

Issues for the UK steel industry

Excess capacity in the global steel industry has created a glut of steel on the international market. This has pushed steel prices down, putting pressure on the UK steel industry, where overheads, especially electricity prices, are higher than in some other countries.

The sector consistently calls for more government action, especially regarding energy costs, public procurement and protecting the UK market from imports of steel produced to lower emission standards. The steel industry is also calling on the government to support its transition to lower carbon steelmaking, where the manufacturing process has lower environmental impact compared to the traditional processes.

Government policy on steel

The government announced on 11 September 2024 that it would introduce a new steel strategy in the spring of 2025. It aims “to ramp up investment, strengthen our supply chains and create more well-paid jobs in the places where they’re most needed” but said it does not intend to “prioritise short-term subsidies over long-term jobs.” A consultation on the strategy ran till 30 March 2025.

The government sees the steel industry’s transition to low-carbon steelmaking as essential to reaching the UK’s net zero goals. It has said it aims to support domestic steel manufacturing through public procurement and look at the high electricity prices in the UK.

The government will reserve £2.5 billion for steel, in addition to the £500 million for the transformation at Port Talbot agreed by the previous government. It has said that the funds will be available through the newly created National Wealth Fund (NWF), and other routes. The NWF will have at least £5.8 billion in investment for green steel, green hydrogen, carbon capture, and other projects, some of which will affect the steel industry.

Previous governments responded to the difficulties in the industry over the past nine years with several policy initiatives.

This included using public procurement policy to support the sector. For example, in 2017 the government introduced a Steel public procurement pipeline, which collates information on government infrastructure projects. This is intended to help steel manufacturers to plan for future demand.

Energy intensive industries such as steel have access to a compensation mechanism for indirect costs incurred (through higher electricity prices) from carbon reduction polices, such as the carbon price floor, the climate change levy, renewables obligation and feed-in-tariffs.

Following the UK’s exit from the EU, the government implemented a trade remedies policy for steel aimed at protecting domestic manufacturers from a surge in imported steel.

Besides these initiatives, targeted funding has been available to support green technologies and net zero transition.

Decarbonisation of the steel industry

The steel industry is a significant contributor to greenhouse gas emissions. It is responsible for 13.4% of greenhouse gas emissions from manufacturing, and 2.2% of total UK greenhouse gas emissions. This is a high proportion given the industry’s overall share in the economy. Decarbonisation of steelmaking is an important part of reaching the government’s target to achieve net-zero greenhouse gas emissions in the UK by 2050. Steel is also an important part of a low-carbon economy, necessary to make wind turbines, electric vehicles, energy-efficient products and infrastructure.

As part of the decarbonisation trajectory, Tata Steel has closed its blast furnace steelmaking in Port Talbot in South Wales to replace it with less carbon-intensive electric arc furnaces (EAF), which need fewer people to operate. Over 2,800 jobs are expected to go at Tata Steel locations across the UK over the coming three years, starting in 2024. Similarly, British Steel had plans to replace its blast furnaces in Scunthorpe by 2025 and replace them with a single EAF in Scunthorpe and one at Teesside, with consequences for jobs.

This has raised concerns about the future of the sector in the UK and the impact of transition to electric arc steelmaking on employment and local communities. There are also concerns about the potential loss of the UK’s ability to produce primary or virgin steel (from iron ore as opposed to steel scrap), and sufficient access to steel scrap.

Latest developments US tariffs on aluminium and steel

US President Trump announced a 25% tariff on US imports of steel, aluminium and derivative goods, which came into force from 12 March 2025. This repeals an exemption from a 25% tariff on steel and 10% tariff on aluminium imports to the US, which the UK Government reached with the Biden administration in 2022. UK Steel expects the tariff will affect UK exports to the US negatively.

For now, the UK Government has decided not to impose tariffs on US goods in response, following the EU’s recently announcement to retaliate. The government has said it will seek to engage with the US counterparts “in a constructive and mature dialogue” to address the issue and seek to remove tariffs. It is negotiating a trade deal with the US Administration. At the same time, ministers have not excluded potential tariffs on some US goods.

British steel and recall of Parliament

On 27 March 2025, British Steel announced it was preparing to close blast furnaces at Scunthorpe, claiming losses from operations amounted to £700.000 a day. The government has been in negotiations with British Steel to facilitate the transition to electric arc steelmaking.

According to a government announcement of 7 April, British Steel had rejected its offer of public funding on 24 March. Ministers have said that talks are ongoing. While the government prefers British Steel to continue as a commercially run business, it has said that all options remain on the table. This included potential nationalisation of British Steel. The government has said it is committed to keeping the blast furnace capacity at Scunthorpe alive.

On 11 April 2025, the Speakers of the two Houses of Parliament announced that both Houses would be recalled on Saturday 12 April 2025 “to consider legislative proposals … to ensure the continued operation of British Steel blast furnaces is safeguarded”.

The Prime Minster said Parliament will be asked to pass emergency legislation to give the business secretary powers to do everything possible to stop the closure of these blast furnaces. He reiterated the government will keep all options on the table.