Tata Steel UK, which has been a pain point for India’s leading producer of the alloy for years, would be in a “better position” than before, once the new “Steel Strategy” unveiled by the UK government is implemented, a senior official of the company said.
Last week, the Keir Starmer-led Labour government unveiled the roadmap to re-charge the steel industry in the island nation, unveiling an ambitious target to make sure that 50 per cent of steel used in the UK is made in the UK, boosting production from 30 per cent.
Additionally, steel import quotas are set to be reduced with higher tariffs of 50 per cent outside of quotas, ensuring the UK steel sector’s future in the face of global overcapacity.
The Strategy was launched at Port Talbot, the main production site of Tata Steel, by the business and trade secretary Peter Kyle where he also met steel workers.
The new measures will roll out from July 1 when overall quota levels for steel imports will be significantly reduced by 60 per cent compared with current arrangements, and steel coming into the UK above these levels will be subject to a 50 per cent tariff.
Tata Steel is UK’s largest producer of the alloy — it is in the process of setting up an electric arc furnace-based plant with a 3.2-million-tonne capacity using scrap as primary raw material. The £1.25 billion project is funded partly by a £500 million grant from the UK government.
Commenting on the development, Koushik Chatterjee, executive director & CFO of Tata Steel, said the measure “certainly helps”.
“From a supply imbalance point of view this certainly helps and I am sure Tata Steel UK will be in a better position than before,” Chatterjee told The Telegraph.
He pointed out that the UK steel production has halved in the last decade itself with domestic supply currently at 30 per cent of the national demand. Against this backdrop, this is perhaps the first time that a comprehensive long-term plan for the steel industry has been published compared with a pattern of reactive crisis reaction in the past, Chatterjee observed.
“This is a more structured approach to addressing strategic issues of the UK steel industry and aims to reverse the trend which is so essential. From July 1, the import quotas are proposed to be cut by 60 per cent and the out of quota tariffs will be increased to 50 per cent. This is in line with the EU announcement also and is material in the UK context which is being plagued by imports,” Chatterjee observed.
The EU is implementing a stricter steel import regime from July 1, reducing duty free quotas by close to 50 per cent and doubling out of quota duties to 50 per cent. The measure is expected to benefit all European steel manufacturers, including Tata Steel Netherlands.
UK measures
The UK Steel Strategy also includes additional features that suit the strategic shift towards green steel.
“I would like to also highlight two more very important strategic parts of the announcement, first that electric arc furnace is the technology to pursue in the future in the UK and second, recognising scrap as a nationally important strategic raw material that needs to be leveraged in the future,” Chatterjee observed.
The UK steel industry would monitor if the policy support would address the cheap imports which adversely impacted the financial health of manufacturing units over decades. A carbon border adjustment mechanism (CBAM) as being rolled out in the EU, is also in the works.
“I think the huge deluge of exports through higher than consumption quotas will now taper down and the market dynamics will look better. The UK CBAM from 2027 will also have a positive impact on the steel economics in the UK, as is predicted in the EU this year onwards. The CBAM will also help in the investment case for the future low carbon technology investments in the UK like the EAF,” Chatterjee observed.
In 2024, the UK had 8.7 million tonnes of capacity and 4 mt production. In 2025, the demand was about 9.1 mt and projected to go up to 14 mt by 2050.
Chatterjee argued that demand is critical for long-term sustenance of the industry.
“As a country though, there is one other fundamental issue that is work in progress — the demand in the UK needs to get back to what it was at least a decade back and hence policy interventions to promote more “Make in Britain” will also be critical for long term sustenance. The Steel Strategy will also encourage local investments in value added segments in the future,” the Tata Steel ED & CFO observed.