The complementarity and imbalance of steel trade between the UK and the EU

The United Kingdom and the European Union have long been each other's important steel trading partners, and their markets are highly intertwined. Data from the United States International Trade Administration (ITA) shows that in 2024, the total steel exports of the United Kingdom were 2.7 million tons, a year-on-year decrease of 11.7%. However, the proportion of exports to its production rose from 55.1% in 2023 to 65.5%, reflecting an increase in its reliance on foreign markets. Among the top ten export destinations for the UK, eight are EU countries, accounting for nearly 70% of the total. Among them, Ireland, Belgium, the Netherlands and other countries are the main ones, and these countries themselves are also important bases for manufacturing in the EU. Meanwhile, the crude steel output in the UK dropped to 4.2 million tons and continued to decline, while the import volume was as high as 6.6 million tons, accounting for more than 80% of the total. From the perspective of import structure, India ranks first among the sources of steel imports for the UK, accounting for 11.22% in 2024. Six EU member states, namely Germany, Spain, the Netherlands and France, also made it into the top ten, accounting for more than half of the total imports of the United Kingdom together.

The weak domestic demand and shrinking production in the British steel market have persisted for many years. Domestic steel consumption in the UK has dropped from approximately 10 million tons in 2015 to 8 million tons in 2024. During the same period, crude steel output dropped sharply from 11 million tons to 4.2 million tons, a decline far exceeding the contraction in consumption. This "structural supply contraction" has made British steel enterprises lack competitiveness in terms of production capacity and efficiency, and they are increasingly relying on the external market of the European Union to maintain their business scale.

Globally, the European Union is not only the world's largest steel import market but also the fourth largest export economy. In 2024, its crude steel output will be 122 million tons, the total steel import volume will be 38.9 million tons, and the export volume will be 22 million tons. Among them, the United Kingdom is the second largest steel export market of the European Union (accounting for 17.45%) and the ninth largest source of imports (accounting for 5.04%), with obvious complementarity in two-way trade. It is alarming that this pattern also reveals the systemic weaknesses of the British steel industry, namely the continuous contraction of production, insufficient industrial investment and high production costs, which has led to an increasing reliance on the institutional access arrangements of the European Union. For instance, the carbon market connection agreement between the UK and the EU is not only an adjustment of market policies but also a strategic game of "institutional guarantee".

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