Steel price row

Steel fabricators are poised to boost their profits by cashing in on Asian and East European steel imports costing 25 per cent less than equivalent UK products.

The cut-price deals could also offer a bonus to several large PFI health schemes that will feature large steel contracts.

One of the largest UK fabricators, Watson Steel, said it is willing to switch from British Steel to take advantage of the present bargains.

A spokesman said: "So far we have had a good relationship with British Steel, but this is not a fixed partnership. We will certainly entertain the prospect of cost savings if we are approached."

Already steel imports have increased by 70 per cent on last year, as the collapse of the Asian and Russian economies has led to fire sale prices that have undercut UK manufacturers.

East European imports have led to the closure of four mills within the last few weeks. British Steel, the largest UK steel manufacturer, announced a 30 per cent reduction in profits last week.

Ian Rogers, UK Steel Association director of policy, said: "The situation is dire, the steel is coming in extremely cheaply, rumoured as unbeatable. This is already leading to tremendous job losses.

"A huge proportion of this steel is destined for construction, in plates and the non-rerolling end of hot-rolled coil. UK fabricators are reducing costs across the board, and I expect extended shutdowns over the Christmas period. There is a basic problem, in that supply is vastly exceeding demand."

But the bargains for UK construction projects may be shortlived. European Union steelmakers are set to launch dumping complaints over steel imports from up to eight Asian, African, and East European countries.

Eurofer, the European Confederation of Iron and Steel Industries, will issue formal complaints to the European Commission next week over hot-rolled coil from Bulgaria, India, Iran, Serbia, South Africa, Taiwan, South Korea, and Indonesia.

These actions will be followed by further complaints on products such as cold-rolled and coated steel, which could take in countries including China and Turkey.

Sir Leon Brittan, EU trade commissioner, said that any dumping complaints would be treated according to international rules.