Steel traders raise alarm over imports by Tata Steel UK

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British steel traders have warned that Tata Steel UK, which won £500mn in government aid, risks distorting the domestic market in a key steel product by hoovering up a trade quota for lower-cost imports.

The move by Tata has prompted demands for a review of UK trade measures designed to protect the domestic industry and sparked a row just days after the company secured a major taxpayer support package.

The traders said that Indian-owned Tata Steel UK, Britain’s largest steelmaker, had imported large amounts of hot-rolled coil, a benchmark product used to make pipes and other steel structures, from India.

Under safeguards established by the Trade Remedies Authority (TRA) specific volumes of hot-rolled coil can be imported from the EU, Turkey, Taiwan and “other countries” — which include India — before a 25 per cent duty applies. The quota system works on a first come, first served basis. 

The industry said that while the quota for EU steel is underutilised, the quota for “other countries” had been fully used for two quarters by Tata.

As a result, some importers have been prevented from bringing in the steel product from other, usually lower-cost, countries without paying the duty. 

“This distorts the market with detrimental consequences on competitiveness and on customer prices,” said Marco Longhi, Conservative MP for Dudley North where several steel companies are based.

He issued the warning in a letter, seen by the Financial Times, to the TRA this week in which he urged the agency to carry out an “emergency review” of quotas for hot-rolled coil. 

According to Longhi, Tata Steel UK is due to bring in about 20,000 tonnes of hot-rolled coil from India in the fourth quarter, just shy of the official quota availability for imports from “other countries” of 22,837 tonnes.

“Through this action Tata Steel UK will, in effect, cause all the importers under this tariff to pay additional duties,” Longhi wrote in the letter.

The industry’s trade body, the International Steel Trade Association, wants the TRA to give a specific quota to Tata Steel UK or to increase the quota volumes that can be imported before the 25 per cent duty applies. 

Industry executives said Tata’s actions could drive up prices for other domestic and more longstanding importers, but conceded that the steelmaker had not broken any rules.

The UK government recently announced a £500mn support package to help the company move to greener forms of steelmaking at its Port Talbot site in Wales.

Christian De Morgan, chair of Meridian Steel, a Dudley-based steel company that imports hot-rolled coil from India, said it faced “significant and potentially unsustainable additional costs as a result of this situation”.

“We have very real concerns regarding the potential inflationary pressure on domestic steel pricing and threat to jobs in the wider domestic steel industry, should a sensible solution not be found,” he added. 

“Tata is not doing anything wrong but by bringing in essentially the whole of the ‘other countries’ hot-rolled coil quota it narrows down the sourcing options for other importers,” said Colin Richardson, head of steel at global energy and commodity price reporting agency Argus Media.

Tata said that, like most other steelmakers, the company “on occasion . . . compliments its own production with supplies from other sources to balance its utilisation of downstream production assets”.

It added that the total “import quota for hot rolled coil exceeds 200,000 tonnes each quarter” and that “there has not been a quarter when this quota has been fully utilised since UK quotas were introduced”.

The TRA said it was “aware of the commercial concerns around the current quota”. It was “examining the tariff rate quota” for hot-rolled coil as part of a review of 15 categories of steel products.