Why UK is close to becoming only G7 nation without steel production ability

British Steel has announced plans to close its two blast furnaces and steelmaking operations in Scunthorpe, marking the end of more than 160 years of steel production in the town

The United Kingdom, once the birthplace of the Industrial Revolution, now faces a major crisis in its steel industry. British Steel has announced plans to close its two blast furnaces and steelmaking operations in Scunthorpe, a move that threatens up to 2,700 jobs and marks the end of more than 160 years of steel production in the town.

 

The company, owned by China’s Jingye Group, has cited financial losses of £700,000 per day as well as economic pressures including tariffs and rising environmental costs. The decision has been met with strong criticism from trade unions, who have described it as “devastating”.

 

 

The closure of Scunthorpe’s furnaces follows a similar decision by Tata Steel to shut down its blast furnaces in Port Talbot, Wales. This would leave the UK as the only G7 country without the ability to produce steel from scratch using traditional methods.

 

Gareth Stace, director general of the industry body UK Steel, warned that losing these facilities would severely impact national security, infrastructure, and construction sectors. “This is an irreparable break in the armour of national security,” he said as quoted by The Guardian.

 

From industrial revolution to industrial decline

 

The steel industry has long been central to Britain’s economy. During the 18th and 19th centuries, the UK was at the forefront of the Industrial Revolution, pioneering advancements in iron and steel production. Innovations such as Henry Bessemer’s steel-making process in the 1850s allowed Britain to dominate global steel production, fuelling railway expansion, shipbuilding, and the rise of industrial cities like Sheffield, Birmingham, and Manchester. However, in the 20th and 21st centuries, the industry has faced continuous decline.

 

Why UK has become dependent on imported steel

 

Once an industrial powerhouse, the UK has become increasingly reliant on imported steel, raising concerns over economic and strategic vulnerability. In 2023, net import of steel in the UK reached 4.6 million metric tons, accounting for a 60 per cent import share — up from 55 per cent the previous year, according to data by UK Steel. This import share went up even as overall imports fell by 5 per cent, partly due to higher volumes from countries like India and Vietnam, which benefit from lower electricity costs.

 

According to the ‘UK steel industry: Statistics and policy’ report presented before the House of Commons in March 2025, a combination of fierce international competition and high domestic costs has made many UK steel plants struggle to be competitive in a global market. It furssthser states that “long-standing uncompetitive electricity prices have constrained UK investment and steel production for some time.”

 

The report also identifies Chinese overproduction among the reasons driving higher imports. China accounts for a massive share of global steel production — 54 per cent in 2023. Its steel output has increased dramatically over the past two decades, rising from 13 per cent of global production in 1995 to more than half now. This has resulted in a global surplus of steel, depressing prices internationally and making it difficult for UK producers to compete.

 

A ‘persistent and growing problem’ of global excess steel capacity, largely driven by Chinese overproduction and exports, has depressed global steel prices. This has made it harder for UK producers to compete, encouraging imports.

 

Global and geopolitical pressures

 

The crisis is worsened by international developments. The ongoing war in Ukraine has disrupted global supply chains and increased raw material costs, making steel production more expensive.

 

Donald Trump’s return to the White House hasn’t helped the UK’s cause either. The Trump administration recently re-imposed a 25 per cent tariff on steel imports, reducing the competitiveness of British exports.

 

What is the British government doing?

 

The UK government had offered a £500 million package to help British Steel transition to more environmentally friendly electric arc furnaces (EAFs). However, the Jingye Group rejected the deal, arguing that more investment — potentially up to £1 billion — would be needed to complete the transition.

 

Sarah Jones, the Energy Minister, stated that the government remains open to discussions. “Our preferred approach is for British Steel to come back to the table and work towards private sector investment,” she said. Nationalisation has not been ruled out, though it remains a politically contentious option.

 

We must protect British Steel.  If the Scunthorpe blast furnaces are closed down, they will not be recoverable.  The steel industry would go into steep decline, with more people unemployed. All to import steel from China at a much higher cost. pic.twitter.com/6y6GtR4CkU

— Bob Blackman (@BobBlackman) March 27, 2025

 

In the meantime, with steel production declining, the UK risks being left without a domestic supply of raw steel, raising concerns over its ability to sustain industries reliant on high-quality steel products. The fate of the UK steel industry remains uncertain. While the transition to electric arc furnaces is being explored, it may not be completed for several years. In the interim, the UK will have to rely on imported steel, heightening worries about supply chain security and the loss of skilled jobs.