Cheap Chinese steel imports force Tata deep into the red

TATA Steel plunged to a loss as it blamed cheap imports from China and a string of EU failures for disappointing trading.

The Indian firm owns some of the UK’s biggest steel plants and has been forced to lay off thousands of workers as it desperately attempts to turn the business around.

Karl-Ulrich Koehler, chief executive of the firm’s European operation, said recent events had led to a ‘perfect storm’ and this ‘caused the deterioration of our financial performance in the last quarter’.

He said: ‘Growing European steel demand continues to be undermined by a flood of imports into the region.’

The industry has been devastated by a deluge of cheap steel which has mainly come from China. Lower growth from the Asian powerhouse left it with an excess of steel and it has been exporting this to Europe.

Chinese steel shipments have leapt more than 50pc last year, while imports from Russia and South Korea jumped 25pc and 30pc respectively.

The European Steel Association has identified that Chinese steel is being exported at prices below the cost of production, a practice known as dumping. Koehler said: ‘This unfair trade is undercutting domestic producers and harming the European steel industry which employs many thousands of people.’

Tata Steel claims this is what was behind it tumbling into the red to the tune of £190m from a profit of £58m over the third quarter.

While it does not break out a UK figure, European earnings fell to £68m from £133m for the same period last year.

Steel prices are at a ten-year low due to the record amount of Chinese exports and the crisis has been compounded by UK firms paying some of the highest energy costs and green taxes in the world.

At the end of last year Tata announced plans to cut 1,200 jobs, with 900 lost at Scunthorpe and 270 in Scotland. The rest were being laid off at other UK sites. Last month it said a further 750 jobs would go at its Port Talbot plant in South Wales along with 200 in support functions.