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Hinkley Point a boost to UK steel, but not a game changer

By Maytaal Angel

(Reuters) - steelmakers are likely to win deals to supply the 18 billion pound ($23 billion) power plant at Hinkley Point, although that may not be enough to bolster Britain's troubled sector, industry experts say.

Helped rising prices and a falling pound making exports more competitive, firms are emerging from a crisis that has cost around 5,000 jobs, or a fifth of the workforce, since last October. approved the China-backed Hinkley Point project last Thursday.

But Britain's industry says it needs more infrastructure projects, lower energy costs and, crucially, more measures to prevent dumped or subsidised from China and elsewhere from entering the country.

"It's good (news) ... but I don't think a Hinkley Point can sustain British steelmaking for the next decade," said Ben Orhan, senior economist at consultants His.

EDF, the French utility that will build Hinkley Point C in southwest England, has said more than 60 percent of construction spending on the project will go to British companies.

Wales-based Express Reinforcements was named preferred bidder to supply Hinkley Point with 200,000 tonnes of reinforcing steel, which it will source from Celsa UK.

This is 25 times more than was used in London's Olympic Stadium and is worth $84 million, according to calculations based on current prices.

EDF declined to comment on Hinkley Point's total needs, but even if, as some experts expect, the project will require at least a million tonnes of steel, this will be spread over nearly a decade.

That is a fraction of the 10.8 million tonnes of produced last year in the UK, according to the World Association.

TRADE DEFENCES

EDF also declined to comment on whether Chinese steelmakers will supply the project, though some say they might given that Hinkley Point is backed by $8 billion worth of Chinese funding.

The European Union has ramped up trade defences in over the past couple of years. It currently has 37 anti-dumping and anti-subsidy measures in place for products, 15 of them concerning China.

Since April, British government rules mandate that all public sector projects must consider the social and environmental impact of the they source, and cannot just opt for the most cost-effective bidder.

"This is the first major project announced since the (government) procurement rules changed. As such it is the first test for government," Gareth Stace, head of industry group Steel, said.

The British government said Hinkley Point was not a public sector project, but added: "companies have already been successful in securing over 250 million pounds of manufacturing contracts ... and 64 percent of the (Hinkley Point) construction value is expected to come from British companies."

EDF has said the largest forgings, used in the reactors, will be procured overseas because steelmakers do not produce them. French group Areva told it will supply forgings for Hinkley Point. In July, EDF signed a memorandum of understanding with Areva about acquiring a controlling stake in the group's reactor business.[nFWN1BR046]

Areva was not immediately available to comment. Tata UK, Britain's largest steelmaker, said it has the capacity to supply much of the high-quality required for Hinkley Point.

"We hope the wider value of using local supply for projects like this is fully taken into account," a Tata spokesman said.

The UK's Liberty House Group said it will look to supply products like plates for Hinkley, while British Steel, owned by Greybull Capital, makes construction 'sections' and is expected to bid. It was not immediately available to comment.

EDF estimates it will need 600,000 embedment plates and about 50,000 tonnes of structural sections.

"Whenever something big comes up people get excited but we need a multitude of infrastructure projects," a UK-based industry source said. "No one project is ever going to solve an industry's problem." ($1 = 0.7651 pounds)

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

North European prices http://tmsnrt.rs/2cK6HGN

economic output by industry (source: government data) http://tmsnrt.rs/2d4tTz8

sector crisis http://tmsnrt.rs/2d922tx

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

(Additional reporting by Susanna Twidale; editing by Pratima Desai/Ruth Pitchford)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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177 22
Business Standard

Hinkley Point a boost to UK steel, but not a game changer

Reuters  |  LONDON 

By Maytaal Angel

(Reuters) - steelmakers are likely to win deals to supply the 18 billion pound ($23 billion) power plant at Hinkley Point, although that may not be enough to bolster Britain's troubled sector, industry experts say.

Helped rising prices and a falling pound making exports more competitive, firms are emerging from a crisis that has cost around 5,000 jobs, or a fifth of the workforce, since last October. approved the China-backed Hinkley Point project last Thursday.

But Britain's industry says it needs more infrastructure projects, lower energy costs and, crucially, more measures to prevent dumped or subsidised from China and elsewhere from entering the country.

"It's good (news) ... but I don't think a Hinkley Point can sustain British steelmaking for the next decade," said Ben Orhan, senior economist at consultants His.

EDF, the French utility that will build Hinkley Point C in southwest England, has said more than 60 percent of construction spending on the project will go to British companies.

Wales-based Express Reinforcements was named preferred bidder to supply Hinkley Point with 200,000 tonnes of reinforcing steel, which it will source from Celsa UK.

This is 25 times more than was used in London's Olympic Stadium and is worth $84 million, according to calculations based on current prices.

EDF declined to comment on Hinkley Point's total needs, but even if, as some experts expect, the project will require at least a million tonnes of steel, this will be spread over nearly a decade.

That is a fraction of the 10.8 million tonnes of produced last year in the UK, according to the World Association.

TRADE DEFENCES

EDF also declined to comment on whether Chinese steelmakers will supply the project, though some say they might given that Hinkley Point is backed by $8 billion worth of Chinese funding.

The European Union has ramped up trade defences in over the past couple of years. It currently has 37 anti-dumping and anti-subsidy measures in place for products, 15 of them concerning China.

Since April, British government rules mandate that all public sector projects must consider the social and environmental impact of the they source, and cannot just opt for the most cost-effective bidder.

"This is the first major project announced since the (government) procurement rules changed. As such it is the first test for government," Gareth Stace, head of industry group Steel, said.

The British government said Hinkley Point was not a public sector project, but added: "companies have already been successful in securing over 250 million pounds of manufacturing contracts ... and 64 percent of the (Hinkley Point) construction value is expected to come from British companies."

EDF has said the largest forgings, used in the reactors, will be procured overseas because steelmakers do not produce them. French group Areva told it will supply forgings for Hinkley Point. In July, EDF signed a memorandum of understanding with Areva about acquiring a controlling stake in the group's reactor business.[nFWN1BR046]

Areva was not immediately available to comment. Tata UK, Britain's largest steelmaker, said it has the capacity to supply much of the high-quality required for Hinkley Point.

"We hope the wider value of using local supply for projects like this is fully taken into account," a Tata spokesman said.

The UK's Liberty House Group said it will look to supply products like plates for Hinkley, while British Steel, owned by Greybull Capital, makes construction 'sections' and is expected to bid. It was not immediately available to comment.

EDF estimates it will need 600,000 embedment plates and about 50,000 tonnes of structural sections.

"Whenever something big comes up people get excited but we need a multitude of infrastructure projects," a UK-based industry source said. "No one project is ever going to solve an industry's problem." ($1 = 0.7651 pounds)

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

North European prices http://tmsnrt.rs/2cK6HGN

economic output by industry (source: government data) http://tmsnrt.rs/2d4tTz8

sector crisis http://tmsnrt.rs/2d922tx

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

(Additional reporting by Susanna Twidale; editing by Pratima Desai/Ruth Pitchford)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Hinkley Point a boost to UK steel, but not a game changer

LONDON (Reuters) - UK steelmakers are likely to win deals to supply the 18 billion pound ($23 billion) nuclear power plant at Hinkley Point, although that may not be enough to bolster Britain's troubled steel sector, industry experts say.

By Maytaal Angel

(Reuters) - steelmakers are likely to win deals to supply the 18 billion pound ($23 billion) power plant at Hinkley Point, although that may not be enough to bolster Britain's troubled sector, industry experts say.

Helped rising prices and a falling pound making exports more competitive, firms are emerging from a crisis that has cost around 5,000 jobs, or a fifth of the workforce, since last October. approved the China-backed Hinkley Point project last Thursday.

But Britain's industry says it needs more infrastructure projects, lower energy costs and, crucially, more measures to prevent dumped or subsidised from China and elsewhere from entering the country.

"It's good (news) ... but I don't think a Hinkley Point can sustain British steelmaking for the next decade," said Ben Orhan, senior economist at consultants His.

EDF, the French utility that will build Hinkley Point C in southwest England, has said more than 60 percent of construction spending on the project will go to British companies.

Wales-based Express Reinforcements was named preferred bidder to supply Hinkley Point with 200,000 tonnes of reinforcing steel, which it will source from Celsa UK.

This is 25 times more than was used in London's Olympic Stadium and is worth $84 million, according to calculations based on current prices.

EDF declined to comment on Hinkley Point's total needs, but even if, as some experts expect, the project will require at least a million tonnes of steel, this will be spread over nearly a decade.

That is a fraction of the 10.8 million tonnes of produced last year in the UK, according to the World Association.

TRADE DEFENCES

EDF also declined to comment on whether Chinese steelmakers will supply the project, though some say they might given that Hinkley Point is backed by $8 billion worth of Chinese funding.

The European Union has ramped up trade defences in over the past couple of years. It currently has 37 anti-dumping and anti-subsidy measures in place for products, 15 of them concerning China.

Since April, British government rules mandate that all public sector projects must consider the social and environmental impact of the they source, and cannot just opt for the most cost-effective bidder.

"This is the first major project announced since the (government) procurement rules changed. As such it is the first test for government," Gareth Stace, head of industry group Steel, said.

The British government said Hinkley Point was not a public sector project, but added: "companies have already been successful in securing over 250 million pounds of manufacturing contracts ... and 64 percent of the (Hinkley Point) construction value is expected to come from British companies."

EDF has said the largest forgings, used in the reactors, will be procured overseas because steelmakers do not produce them. French group Areva told it will supply forgings for Hinkley Point. In July, EDF signed a memorandum of understanding with Areva about acquiring a controlling stake in the group's reactor business.[nFWN1BR046]

Areva was not immediately available to comment. Tata UK, Britain's largest steelmaker, said it has the capacity to supply much of the high-quality required for Hinkley Point.

"We hope the wider value of using local supply for projects like this is fully taken into account," a Tata spokesman said.

The UK's Liberty House Group said it will look to supply products like plates for Hinkley, while British Steel, owned by Greybull Capital, makes construction 'sections' and is expected to bid. It was not immediately available to comment.

EDF estimates it will need 600,000 embedment plates and about 50,000 tonnes of structural sections.

"Whenever something big comes up people get excited but we need a multitude of infrastructure projects," a UK-based industry source said. "No one project is ever going to solve an industry's problem." ($1 = 0.7651 pounds)

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

North European prices http://tmsnrt.rs/2cK6HGN

economic output by industry (source: government data) http://tmsnrt.rs/2d4tTz8

sector crisis http://tmsnrt.rs/2d922tx

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

(Additional reporting by Susanna Twidale; editing by Pratima Desai/Ruth Pitchford)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

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