Steel industry calls on G7 to protect it from China
Cameron says bids for Tata UK encouraging
BRUSSELS, May 25, (RTRS): Twelve global steel associations urged the Group of Seven advanced economies, which meet in Japan this week, to prevent cheap Chinese steel distorting world markets and inflicting further pain on producers.
Steelmakers have been hit by a plunge in steel prices, which Europe and the United States have blamed on a surge in cheap exports from China that has exacerbated the impact of a collapse in demand following economic crisis.
Among the casualties are Tata Steel, which in March announced it was selling its British operations as it could no longer sustain deep losses, prompting a political scramble to save the thousands of jobs at stake.
The White House has already said discussion of actions to reduce global industrial overcapacity, with an emphasis on the steel glut, would be on the agenda for Japan talks starting on Thursday.
Open letters made public on Wednesday to world leaders from 12 steel industry bodies and other manufacturers said that discussion must include action against countries that do not respect market economy conditions, especially China, and oversupply had to be tackled.
“If global overcapacity borne of statesupported enterprises’ uneconomic operations continues it will threaten the survival of efficient companies operating in environments with little or no government support,” Axel Eggert, director general of the European steel body EUROFER, said in an emailed statement.
Meanwhile, Tata Steel has received an encouraging number of serious offers for its British assets Prime Minister David Cameron said on Wednesday but also said there were no guarantees of a successful conclusion.
Britain’s steel industry has been hit by cheap Chinese imports, high energy costs and a global supply glut. In March, Tata said it wanted to sell its loss-making operation in the country, putting 15,000 jobs at risk.
Tata’s decision has turned the spotlight on the global steel market and the impact of Chinese exports that could lead to protectionist trade policies.
The British government is keen to avoid job losses just weeks before a referendum on membership of the European Union and has offered financial support to help find a new buyer for Tata’s steel businesses.
“We continue to work towards trying to get a good outcome for Tata in south Wales, the sales process is under way, there has been an encouraging number of serious offers coming through,” Cameron said on a flight to Japan for a G7 meeting.
Sources told Reuters on Tuesday at least four individual bids had been submitted, from management buyout vehicle Excalibur Steel, Sanjeev Gupta’s Liberty House metals group, India’s JSW Steel Ltd and Greybull Capital. Tata did not comment on the bidding process.
Cameron said: “We have just got to stick at it and do everything we can to try to bring this to a successful conclusion. As I have always said, there are no guarantees, we can’t guarantee this is going to work but we are doing everything we can.”
Government officials said they were confident the offer of state support would be enough to secure a sale.
Business Secretary Sajid Javid held talks with Tata chairman Cyrus Mistry in Mumbai ahead of the company’s board meeting later on Wednesday, which is expected to produce a shortlist from among the bidders.
“(Javid) is really encouraged by all the proposals that were submitted. I would describe it as a productive meeting,” a government source said. Javid has spoken to each of the bidders.
As well as poring over the details of the bids, the two hour talks focused on the government’s willingness to back the sale with hundreds of millions of pounds of support.