Tata Steel warns that steel production in Great Britain needs a higher profit to survive

The last decade has seen some of the most traumatic years in the steel industry. Affected by the global financial crisis and then by a collapse in raw material prices in 2015. The owner of Tata Steel Ltd. struggled to make money in the UK. It has sold most of its British assets, bought in a $12 billion deal just a decade ago. But he still runs the factory in Port Talbot after abandoning a sale process in 2016.

The smoking towers of Port Talbot steelworks have dominated the southern Wales skyline for more than a century. To continue to do so in the coming decades, they will need to produce more money.

While reduced cheap Chinese supply has helped the market recover over the past few years, Tata is merging its European steel operations with German rival Thyssenkrupp AG to better compete. Although the companies say this will create a stronger business on the continent – second only to ArcelorMittal. Tata’s UK operations have greatly depreciated their assets.

For now, Tata Steel is working on extending the life of one of Port Talbot’s two blast furnaces and has committed to keeping both operational until at least 2022. After that, everything will depend on performance.

Traumatic years of the British steel industry

British steel production has been in decline for more than a century. Eclipsed by the USA until the beginning of the First World War and later surpassed by Germany. In the 1970s and 1980s, inefficient and outdated installations recorded a drop in production, behind France, Italy and Belgium. Recently, a lack of investment, higher energy costs and a tough regulatory environment have affected UK steelmakers who once produced around 40% of global supply.

Tata Steel also faces the uncertainty of Brexit. With only six months until Britain is going to leave the European Union and the parliamentarians of both parties have not yet reached an agreement, steel producers are preparing for the worst.

Article source: https://economictimes.indiatimes.com/industry/indl-goods/svs/steel/tata-warns-that-uk-steel-making-needs-bigger-profits-to-survive/articleshow/65902897.cms