Try to work out how global trade escalated to the current sour state of tariffs and counter-tariffs, and you’ll find that steel was among the critical triggers.
While many of the factors influencing steel costs and supplies may seem a world away from UK construction sites, the trickle-down effects have potentially huge repercussions for an industry vital to contracting.
China’s dominance of steel production has shot up dramatically in recent years. In 2003 it was producing 223.3m tonnes, ahead of second-placed Japan’s 110.5m.
Fast-forward to 2017 and Japanese output has barely changed at 104.7m tonnes – still enough for second place. In contrast, China’s production has rocketed more than threefold to stand at 831.7m tonnes last year.
A significant amount of China’s steel has been used by its booming construction industry over those years, but much of it also flooded into international markets – and had a significant impact on steel prices in the process.
Britain’s steel industry felt the full effects of this between September 2015 and March 2016, when a combination of cheap Chinese steel, a strong pound and high domestic energy costs created a perfect storm.
It led to the collapse of SSI’s UK subsidiary as well as Caparo Industries with 3,200 jobs lost, and convinced Tata Steel to put its UK operations up for sale after the Indian firm had already cut 2,200 jobs.
At government level meanwhile, it was around this time that the US imposed its first significant tariffs on Chinese exports. President Obama slapped a 522 per cent tariff on cold-rolled steel in May 2016 – up from 266 per cent.
The EU followed suit two months later in July, applying a five-year anti-dumping duty ranging from 18.4 to 22.5 per cent on Chinese high-performance steel bars.
In announcing further tariffs in June last year, the EU Commission pointed out that, since it produced a report on stabilising the European steel industry in March 2016, “12 anti-dumping measures have been put in place, most of which cover products from China”.
All of this is especially pertinent now because, in light of Brexit, the UK will no longer be able to lobby the EU to take action; Britain is going to have to fight its own corner on the world stage.
Whether or not the UK has the stomach to stand up to the likes of China and US will go a long way to deciding the fate of many domestic industries on which construction relies, not least steel.