The Thai-owned, SSI UK has announced plans to close its Redcar steelworks with a loss of 1,700 jobs in the Teesside area.

The news of closure follows hot on the heels of plans to simply ‘pause’ production, but now Britain’s second biggest steelmaker has made it official and, according to some news reports, by mothballing its Redcar plant, the company threatens to ‘bring the curtain down on 160 years of steelmaking’ in the Teesside area.

When it comes to the question of why, the answer is pretty clear: cheap, Chinese imports flooding into the UK market are making steel production uneconomical.

According to a report in today’s Guardian newspaper, the result of China flooding the market with cheap steel has been a severe reduction in the price of slab steel – down 45% in 12 months from £330/tonne to £280/tonne.

SSI UK has debts in the region of £1.4 billion and has been making a loss ever since SSI bought the business from Tata Steel for £500 million in 2011.

The Guardian quotes Tom Blenkinsop, chairman of the all-party parliamentary group on steel, as saying that China is pouring steel into the European and world market ‘for any currency it can get’.

For the steel industry, of course, cheap Chinese exports are nothing new. Over the past few years, China has been top of the agenda at most steel conferences around the world where the Chinese steel industry has often been described as ‘the elephant in the room’, with many industry insiders warning against granting China ‘market economy status’ – a move, many say, that would simply open the floodgates to more Chinese steel exports.

Gareth Stace, director of UK Steel, told Steel Times International that the loss of jobs and the mothballing of steel production at SSI UK in Redcar was ‘terrible and distressing’ news.

“We’ve called for an emergency summit with Government to look at what more can be done to support the industry. We’ve enjoyed a lot of tea and sympathy, but this summit needs to result in concrete action and support from ministers to reassure the industry and help support its long-term future.

“At the top of the list must be a commitment to deliver on its promise and help create a level playing field for British steel by fully compensating the industry for the high cost of electricity caused by the imposition of climate change policies,” Stace commented.

“Government can also help ease the burden of business rates for this important strategic industry, where steel companies pay five to 10 times more than their competitors in France and Germany,” he said.

Stace urged Ministers to get behind British steel and deliver urgently needed support. “The consequences of inaction would be very serious indeed both for steel, the wider economy and jobs,” he warned.

According to Stace, the issue of Chinese dumping of steel was discussed by George Osborne, the Chancellor of the Exchequer, and Ministers during a recent visit to China.

“I would like to know exactly what the response of the Chinese was and what ministers achieved,” said Stace, adding that the British Government must press the European Union to look at all instances of illegal dumping and the potential breach of EU trade rules.

“So far the European Commission has been very slow to react to this problem,” Stace concluded.