Last week, UK prime minister Kier Starmer laid out plans to nationalise British Steel, one of the country’s last remaining primary steel producers. The move comes after the government seized control of British Steel’s Scunthorpe steelworks from its Chinese owners Jingye in April 2025, to prevent its blast furnaces from shutting down.
The UK’s steel production is the smallest it’s been since the 1930s, following closure of blast furnaces in Port Talbot, Wales, in 2024 and continuing a long-running trend of increasing reliance on imports of cheap steel from China, India and Asia more broadly. As well as hastening the decline of the UK steel industry, imported steels can also undermine efforts to lower the environmental impact of steel production. India is dramatically expanding its steel production, comprising almost entirely coal-fired blast furnaces. The upshot of these combined pressures was that British Steel was operating at a significant loss, hence the proposed shutdown of its furnaces.
The UK government’s steel strategy, published at the end of March, aims to target investment in electric arc furnaces to produce ‘circular steel’ from the UK’s abundant scrap steel. The UK produces around 10–11 million tonnes of scrap steel per year, around 80% of which is currently exported. Domestic energy prices and other systematic barriers around the infrastructure for sorting and separating scrap steel have meant that it is cheaper to export the scrap and re-import finished steel than process it at home. Jingye had planned to install electric arc furnaces at Scunthorpe, but negotiations over government support for the project fell through.
Industry operations researchers Michael Lewis and Annika Skoglund argue in The Conversation that a successful transition will require the state to take a more active role on several fronts, since the supply chain for steel recycling barely exists in the UK. Reducing energy costs for steel producers and reprocessors, reducing import quotas (or applying higher tariffs to imports to enable UK producers to compete), and implementing policies that encourage the creation of scrap sorting and processing infrastructure at the same time as building the electric furnaces that will consume the scrap.
Many aspects of this situation reflect similar issues across the UK’s basic chemicals landscape. Foundational chemical plants are struggling to survive owing to high energy and regulatory costs combined with competition from cheaper imports. While the government has sometimes intervened to support plants such as the country’s last remaining ethylene production plant, many others in less visible industries – such as the country’s last ammonia and sulfuric acid plants – have not managed to convince the government of their strategic importance and have been allowed to close.
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