The state of UK steel: following the shock decline of British Steel, what does the future hold?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Steel is an increasingly dominant material in the UK construction industry; forming, quite literally, the backbone of almost all construction projects, regardless of sector. As such, any changes to the price or availability of steel both here in the UK and worldwide will inevitably impact - either negatively or positively - construction here in the UK.

The precarious position of UK steel has been brought to the fore during the last few weeks as Jingye Group, one of China's leading steelmakers and multinational conglomerates, and the parent company of British Steel, announced that they were losing money at a rate of roughly £700,000 per day.

This shocking announcement quickly led to the passing of an emergency act - The Steel Industry (Special Measures) Act - passed in order to give the government control of the company and maintain British Steel’s output and prevent closure.

UK steel strategy plans announced in February 2025

Although, however desperate the British Steel situation has become in recent weeks, as recently as February this year, the Department for Business and Trade opened a consultation on devising a strategy for the UK steel sector, with mooted options including stimulating demand for domestically produced steel and examining the impact of electricity costs on production.

Widely welcomed by the industry, the government also announced it would support the industry with £2.5bn of investment through the National Wealth Fund.

US tariff terror

Following this, US President Trump announced that - from mid-March - an entire suite of new tariffs on almost every country and territory in the world, set at between 10 & 50%, would come into effect and no exceptions or exemptions would be made for the steel industry, despite its importance.

Trump’s tariffs mean that UK steel now faces a 25% import tax when entering the US which, understandably, industry leaders have criticised, defending steel in the UK as posing “no threat to US national security”.

This move, however, has served to further jeopardize the UK steel industry and has raised multiple questions about its future, particularly worrying at a time when steel here in the UK is already at risk and its trajectory uncertain.

Rising electricity prices

March 2025 also saw widespread discussion of the rising and uncompetitive electricity prices hitting the UK steel industry hard, exacerbated by the fact that the UK - unlike some other European countries - does not have a mechanism in place to protect energy-intensive industries (EIIs) from high wholesale prices.

This leaves British steelmakers with significantly higher production costs than their French or German counterparts and, as a result, has negatively impacted the UK’s ability to remain competitive; which is of particular concern when the global steel market is saturated and a global steel surplus has served to drive down prices.

Global competition from cheap imports

Indeed, alongside this, the UK steel industry is also under mounting pressure from global competition, where countries like China are well-placed to offer steel at a much cheaper price than the prices charged here in Britain.

Pressure to adopt low-carbon technologies

Like many other industries, the UK steel industry is under pressure to adopt low-carbon technologies and find ways to become more sustainable, contributing the UK’s efforts to achieve Net Zero targets.

The transition to low-carbon steelmaking in the UK, however, faces several challenges itself, including the aforementioned high energy costs, as well as the need for significant capital investment, and the potential for stranded assets.

The future of UK steel

The future of the UK steel industry is decidedly uncertain.

As of 2025, UK steelmakers face significant challenges, including intense global competition and the threat of cheaper imports.

Struggling with higher production costs, including rising energy prices, UK steelmakers are grappling with the transition to low-carbon steelmaking without the revenue to back them up or investment to adopt the technologies required.

The UK government’s recent intervention in British Steel is crucial for the industry's survival and long-term sustainability but perhaps doesn’t quite go far enough.

For UK steelmakers to succeed and UK steel trade to increase during a time when global competition is so intensely fierce, our government needs to address high energy costs, implement effective trade policies, and support the transition to low-carbon steelmaking.