Essential that new government projects buy UK steel, as stats show at least £1.5bn could be spent abroad

24 June 2024

New analysis by UK Steel published today, and featured in The Times, has found that current government infrastructure projects may spend over £1.5 billion on steel bought from abroad. The UK steel industry says it needs commitments that projects under the new administration will buy steel made in the UK. 

The statistics come from new UK Steel analysis of government steel public procurement in light of the party manifestos published last week. Over the next decade, existing government figures show a steel order book spend worth an estimated £4.3 billion in public procurement. However, the latest data confirms that only 66% of this steel is purchased from UK steelmakers.

If this trend continues, the UK is potentially missing out on at least £2 billion of cumulative direct and indirect GVA. The opportunity for steel is likely to increase under a new government, as all major political parties have committed to ambitious new infrastructure and energy investments. 

For example, government renewables investments are expected to use enormous amounts of steel. Current government projections suggest that at least six million tonnes of steel will be needed for offshore wind alone over the coming decade, worth an estimated £3.2 billion. UK Steel anticipates this estimate to be far less than what is really needed. Others estimate the real opportunity to be significantly higher, with RenewableUK, the Offshore Wind Industry Council, The Crown Estate and Crown Estate Scotland’s Industrial Growth Plan estimating around 19 million tonnes of cumulative steel demand in the next decade for wind. 

While a good deal of the steel required can be made in the UK, UK Steel says more steel capability investment is needed to supply all the steel requirements. For example, in wide plate steelmaking capability used in wind towers, floating wind structures, as well as the wider offshore wind supply chain.

The UK Steel Election Manifesto can be downloaded here. 

• Government is expected to purchase 8 million tonnes (Mt) of steel over the next decade of which 2.72Mt may be purchased from abroad based on previous domestic-import split.
• Spend figures estimated based on prevailing steel prices of £540/t.
• GVA contribution calculated based on the latest GVA per tonne of steel produced in the UK inferred from the total direct GVA contribution from ONS data as published in the UK Steel Key Stats Report 2024.
• The indirect GVA is calculated using ONS multipliers.
• GVA reflects output less intermediate consumption.

 Steel in the future wind industry: 

• It is predicted that at least 6Mt of steel will be needed for offshore wind alone over the coming decade, and UK steel producers should be at the core of this.
• The Industrial Growth Plan predicts a steel demand of 19Mt of steel from offshore wind until 2035.
• Investment is needed in wide plate steelmaking capability used in wind towers, floating wind structures, as well as the wider offshore wind supply chain, if the UK is to reap the economic benefits of the Net Zero transition. This would anchor manufacturing in the UK and drive inward investment through additional downstream fabrication capability.