Addressing the biennial Forum of UK Steel in London, the President, Mr Tarlock Singh, warned that Russian, Ukrainian and Chinese steelmakers would be the beneficiaries of the many steel- intensive infrastructure projects proposed in UK if the UK government insists on layering more costs on to UK’s steelmakers.

Mr Singh, who is MD of Niagara LaSalle (UK) commented that 2010 had turned out to be better than feared largely thanks to stimulus measures introduced by the then Labour government, and the quantitative easing and low interest rates adopted by the Bank of England.

He warned that 2011 would be more difficult as the current Conservative government’s measures to rapidly cut the deficit are causing job losses and hence a reduction in spending power, in addition to inflation and the increase in VAT driving up prices to consumers.

Despite recovery in steel output from operating plants, overall output in the final quarter 2010 was one-third lower than in Q4 2009, largely as a result of the stopping by Tata Steel of iron and steel production on Teesside.

On a more positive note, interest is being shown by Thai steelmaker Sahaviriya Steel Industries, to reopen and expand the 3Mt/y Teesside plant. Mr Singh also regretted the demise of Carrington Wire – at one time one of UK’s largest wire producers.

Raw material prices were also escalating with ore now quoted on a quarterly basis and the recent floods in Queensland, Australia have also pushed up both ore and coking coal costs.

To compound matters, the UK government is introducing Climate Change legislation which will be the most severe across Europe.

This, with changes in the way low carbon electricity is subsidised, could increase power prices to industry some 70% by 2020.