China’s influence looms large over the UK’s new steel strategy, both as a legal owner and a global competitor. The government’s new plan for Scunthorpe is being shaped, and complicated, by the shadow of Chinese industry.
First, there is the direct legal hurdle: the plant’s owner, Jingye Steel. The government took “emergency state control” in April, fearing the Chinese firm would “close it permanently.” But Jingye is still the “legal owner,” and a “deal… to walk away” is required before any new EAFs can be built.
Second, there is the global market pressure. Business Secretary Peter Kyle explicitly cited “oversupply” as a “slew of crises” facing the industry. A “huge amount of steel has continued to flood global markets from China,” cratering prices and making UK production uncompetitive.
These two factors are forcing the UK’s hand. The EAF plan is a response to this cheap, state-subsidised Chinese steel, an attempt to modernise and compete. However, the government must first negotiate an exit with a Chinese firm (Jingye) before it can invest to fight the effects of the Chinese state’s global policy.
This makes the December steel strategy as much a geopolitical document as an industrial one. It must navigate a delicate ownership transfer while protecting the domestic industry from the very nation it is negotiating with.