Tony WrightTo ask the Secretary of State for Trade and Industry what assessment she has made of the effect of steel(a) price increases and (b) supply problems on manufacturing industry; and if she will make a statement. [177012]
§ Jacqui SmithI am very much aware of concerns about rising steel prices and appreciate that this is an unwelcome pressure on steel consumers at a time when manufacturing is showing signs of recovery. This is a global issue caused primarily by soaring demand in China, which is having a knock on effect on the cost of raw materials such as iron ore, coke and scrap. We acknowledge that the problem is especially difficult for steel users with limited scope to pass on price rises to customers. However, European steel prices are still low compared with USA and South East Asia. There have also been concerns about the availability of steel but I570W understand that there is no shortage of supply from UK producers although there are reports of tightness of those consumers that rely on imported sources of steel.
The Chinese Government has recently introduced measures to dampen economic growth as a result of which Chinese steel imports have fallen pushing down prices in the Far East. It is hoped that this will bring some stability to world markets although industry analysts expect overall world demand to remain firm for the rest of this year.