Metal supply shortages in the UK are likely to kill off the UK economy in the medium term, a leading metal trade association has warned.
Key points:The Metal Supply Association (MSA) said there are currently 3,500 tonnes of steel available to UK firms in a metal supply crisisThe group said there is currently 3.6 million tonnes of aluminium available to British companies and firms in the metal supply problemThe MSA said demand for aluminium is likely to be higher than the supply it is expected to provide and said that it is unlikely to see that level of demand returned until the next recession.
The metal supply industry is in crisis, said the Metal Supply Assocation (MPA), which represents companies that supply the metal industry, including major steel producers, metal suppliers and metals traders.
It said that there are now 3,000 tonnes of aluminum available to the UK steel industry, which is expected at some point to become an industry dependent on imports.
However, it said that the number of tonnes of copper and zinc available in the industry is still limited, with the MSA estimating that there currently are about 4 million tonnes available.
The MPA said it was critical that the UK’s steel industry adapt to the current metal supply situation, as well as the current shortage of steel in the world market, given the global demand for the metals.
The supply crisis is expected by experts to hit the UK as soon as 2020.
The organisation has been working closely with the industry, advising companies on what they should be doing in the face of supply and demand challenges.
“This is the most difficult time to be a steel company,” said Mr Davies, the MPA’s executive director.
“There are only so many hours in the day, so we can’t do anything too rash and there’s no time for a little bit of panic.”
He said the industry had been able to adapt by prioritising supply and by investing in their workforce.
“We’ve had to make the best of this situation by investing, as much as we can, in the infrastructure and the people and the training,” he said.
“It’s a lot harder to do now than it was back in the 1980s, and it will get tougher as the supply of aluminium increases.”
Mr Davies said that while the supply shortage was affecting the steel industry in the short term, it would eventually take a long time for the situation to change.
“What’s happened to steel production in the past three or four years is that there’s been a huge drop in the price of aluminium.
We’re now starting to see a big decline in steel output, as we go into the next major recession,” he told RTE’s Today programme.”
And it will only get worse as we get into the economic recession.”
Mr Edwards, from the Institute of Directors, said there were now only two major producers of aluminium in the steel sector, which are Caspian Steel and Glencore.
“Aluminium has always been an export industry in this country and it has a very important market for that,” he added.
“But we are seeing the rise of China as a major buyer of aluminium and this is a worrying development.”
The demand is so much higher than it used to be, and the cost of aluminium is now so high that it has become more of a commodity than it once was.
“He added that the aluminium industry was still recovering from the recession that began in 2007, but that there was a “long way to go” before the metal would regain its former role as a leading industrial resource.”
As long as we’re in a situation where aluminium is used in products like plastics and aluminium is in some forms of batteries, then we’re not going to see it going away anytime soon,” he warned.
The Government has promised to provide more funding to the aluminium sector to cope with the crisis.