Written by: Keith Tully
Reviewed: Monday 21st September, 2015
Mounting losses attributed largely to the deterioration in global steel prices have seen the owner of a steel plant in Redcar halt production and potentially put 3,000 jobs at risk.
Thailand-based SSI announced the decision to stop production at the Teeside site on September 18th, with no resumption date yet suggested.
The company is understood to be struggling to balance its books and to service some very sizable debts, with its financial prospects hindered considerably by the downturn in the price of its products in recent months.
“We are taking this pause in production in order to re-evaluate and assess the situation following the outcome of ongoing discussions with our various stakeholders, including government and suppliers,” said SSI’s UK business director Cornelius Louwrens.
“It is with great regret that we have had to make this announcement and we are deeply aware of the concern it will give to our employees and their families,” he said.
According to SSI, the price of “slab” steel, which it typically sells on for further processing, has fallen from $500 a tonne to $300 a tonne over the course of the past 12 months.
“The problems within the global steel industry have been well publicised in recent weeks and our decision follows a major deterioration in steel prices affecting our business during the course of this year,” the company said in a statement.
Other steel producers with plants in the UK have scaled back their operations in different parts of the country in recent months and years.
Tata Steel, from which SSI acquired the Redcar plant, announced in August that it would be shedding 250 jobs at a steel-producing facility in Llanwern, south Wales, having cut 400 jobs from its plant in Port Talbot 12 months before.
The same company also cut 720 jobs mainly from its plant in the Yorkshire town of Rotherham in July citing a strong pound and “cripplingly high electricity costs” as key reasons why the decision had to be taken.
Speaking in August, Stuart Wilkie, the director of Tata Strip Products UK, said: “Surging, and often unfairly traded, imports have combined with a strong pound to create a very challenging business environment.”
If you know of any people or businesses that will be effected by the recent news at SSI, please feel free to put them in touch with our Teesside / Tyneside offices, who will offer free advice. We are already advising a number of companies and individuals affected by the liquidation.