 "How China pushed British steel into decline")
What China means for world steel today, Britain meant in 1875 with a nearly 50 per cent share of the global pig iron production and 40 per cent share of steel production.
That was the time when Britain would export the major portion of its steel output to America and the rest of the world. But the once mighty British steel industry is now a tale of inexorable decline.
Figures don't lie. According to the World Steel Association (WSA), Britain made 18.95 million tonnes of the metal in 1988. In the three years starting 2010, its steel production, facing the impact of global recession, stayed below 10 million tonnes per annum. There were improvements since then and production climbed to 12.065 million tonnes in 2014.
The current year has, however, proved to be an unmitigated disaster for British steelmakers and downstream groups engaged in activities like pressing and forging the metal. September steel production was down 43.3 per cent on a year-on-year basis to 579,000 tonnes - a statement of the deepening crisis in the country's steel industry with heavily loss-making mills downing the shutters in rapid succession.
There already is a major Darwinian cull of British steel and steel processing industry. Much of the remaining capacity is likely to go under as world steel prices, down a third so far this year, are at their lowest in over a decade.
A toxic cocktail of high energy bills, green taxes on emissions, crippling business rates and a strong pound makes Britain a very high-cost steel production centre.
A study jointly done by industry body UK Steel and Labour MP Anna Turley finds British steel industry is "disadvantaged to the tune of £480 million a year" because of these factors.
No wonder, then, imports last year met a record 60 per cent of the steel demand of the country's manufacturing and construction industries.
China gains ground
The Chinese steel industry, roiled by the slowest economic growth in the country since 1990 which has caused a decline in steel demand, is under increasing pressure to export the metal. In Europe, Britain is seen as the softest target where bargain-hunting traders and consumers are snapping up low-priced Chinese commodity steel in growing quantities.
Chinese steel is set to meet 8 per cent of the steel demand in Britain this year, up from 2 per cent in 2011.
China, the world's largest producer and user of steel, is nursing over half of the excess global capacity estimated at 645 million tonnes by OECD. But Beijing is not finding it easy to weed out all the "polluting and uneconomic capacity" because of provincial concerns of unemployment and social unrest.
Therefore, China continues with high production, even while WSA has forecast the country's steel demand to contract by 3.5 per cent this year and a further 2 per cent in 2016. Expect China then to remain an aggressive seller of steel in the world market and British steel makers will continue to feel the heat of imports.
China's record export of 11.5 million tonnes in September points to the country finishing 2015 with overseas steel sale of 110 million tonnes against last year's sale of about 94 million tonnes.
The British industry is crying foul that Chinese steel exports in most cases amount to dumping, causing injury to local steelmakers. UK Steel Director Gareth Stace says: "Chinese steelmakers are fully subsidised by the Chinese government and their regions."
His contention finds support in a finding by Metal Bulletin, the intelligence service provider, that China has made it a practice to sell steel in the world market at 10 per cent discount to local prices.
This is the reason why some varieties of Chinese steel are repeatedly falling foul of anti-dumping authorities in the US and European Union.
China, however, contends that the export success of its mills is because they are ahead of most other steel producing countries in productivity and cost effectiveness. It further says the fall in the prices of iron ore and metallurgical coal has improved the competitiveness of Chinese steel.
In an environment of high energy and wage cost and a strong currency supporting imports, the undoing of British steel industry is its making of basic commodity steel.
If anything, mothballing of Britain's second largest blast furnace at Redcar by Thai owner Sahaviriya Steel and Scotland's 130-year-old plate mill by Tata Steel, all engaged in making slabs, bars and rails, should have happened earlier.
The market is so bad that groups such as Nippon Steel & Sumitomo, ArcelorMittal, US Steel and Posco, focussed on making top-end automotive-grade and grain-oriented electrical steel, are finding their margins under increasing pressure.
Whatever noise British trade union leaders and MPs make, asking the government to come to the rescue of mills, the fact is that British steel has lost its strategic significance in terms of its share of GDP and employment. The irony is the remaining resilient manufacturing sector is not regretting the demise of British steel.
