LONDON - Britain's steel industry is vulnerable despite recovering from a 2015 crisis, with many challenges that led to thousands of job cuts still not resolved and risks related to Brexit looming, the chief executive of Tata Steel UK said on Tuesday.
"Currently our nose is above water but our lips are below.Any additional burden can still take us down," said Bimlendra Jha, speaking at a conference in London organised by EEF, Britain's largest manufacturing industry representative.
The UK steel industry is emerging from a crisis that led to the loss of about 7,000 steel jobs, about a quarter of the workforce, between September 2015 and March 2017. Steel prices in the European Union <ST-MBEUDNHRC-MB> have nearly doubled since plunging in early 2016 to their lowest in about a decade.
Tata Steel UK's Indian parent, Tata Steel Ltd <TISC.NS>, this month reported a five-fold increase in third-quarter profit, boosted by strong volume growth in India and rising steel prices around the globe.
But the British steel industry remains vulnerable, with business rates still about 18 times higher than in neighbouring EU countries and electricity costs about 50 percent higher, the same issues that hurt the industry in the crisis.
To protect vulnerable industries from the effects of Britain's departure from the European Union, the government launched an industrial strategy in November, but it has yet to finalise details of the deal for the steel industry.
Britain's exit from the EU in 2019 could destabilise the steel industry, particularly if trade defences that replace those of the EU prove less effective in stopping dumping or subsidised steel from entering Britain.
Steel dumping, especially from China, was a major cause of the 2015 sector crisis.
"I think we'll lose out post-Brexit," said Gareth Stace, director of UK Steel, referring to plans for a customs bill that will provide a framework to prevent unfair trade after Brexit.
Steel, the second most used material in the world after cement, often makes its way up Britain's political agenda because it is seen as a strategic industry for manufacturing and because the metal is used in sensitive military applications.