Key facts
- Tata Steel's Llanwern plant is operating at half capacity due to increased cheap steel imports.
- Tariff-free quotas for galvanised steel from India, Vietnam, and South Korea have been raised.
- The increased quotas are impacting the price competitiveness of UK steel producers like Tata.
- The situation threatens hundreds of jobs and could affect future investments in green steel production.
- The government plans to review the steel quota system in July 2027 and monitor its impact.
Tata Steel's Llanwern plant in south Wales is experiencing significant disruption, with production lines running at half capacity due to a surge in cheap steel imports. The company states that insufficient orders, driven by increased imports from countries like India and Vietnam, are forcing machinery to sit idle and workers onto maintenance tasks.
While the UK government introduced 50% import tariffs in July to protect domestic producers, the situation has reportedly worsened for certain products like galvanised steel, manufactured at Llanwern. This is attributed to an increase in tariff-free quotas for some nations, including India, Vietnam, and South Korea. The allowance for India's galvanised steel imports rose from 98,000 to 125,000 tonnes, Vietnam's more than tripled from 51,000 to 174,000 tonnes, and South Korea received an increased quota of 100,000 tonnes. The larger quota for India is understood to have been a concession to facilitate a trade deal.
Russell Codling, commercial director of Tata Steel, highlighted the unsustainable impact of these quotas on the Llanwern facility, stating that the quotas have the power to ensure the business's sustainability. The factory produces approximately 600,000 tonnes of galvanised steel annually, nearly half of the UK's total demand. Galvanised steel, coated with zinc to prevent corrosion, is widely used in construction and automotive sectors.
Union representatives, including Alasdair McDiarmid from the Community union, have voiced concerns about the threat posed by increased imports to the domestic steel industry, particularly at Llanwern. They are urging the government to adopt a more robust approach to safeguard the plant's future. The ongoing transition at Tata Steel's Port Talbot site to a new electric arc furnace, involving a £1.25 billion investment partly funded by a government grant, could also be jeopardized by prolonged tariff pressures, according to industry sources.
A government spokesperson indicated that the steel measures aim to balance domestic production protection with supply security, and that final quotas were set after extensive industry engagement. While current imports for category 4 are below the set quota levels, the government will continue to consider industry feedback, monitor the impact, and review the measures after 12 months, with a formal review of the quota system scheduled before July 2027.