UK steel campaigners demand action over cheap Turkish imports held in warehouses

Ministers are tonight urged to close a loophole which allows Turkish steel firms to undercut UK rivals.

Companies based in Turkey are allowed to send about 60,000 tonnes of hollow section tubes to the UK every three months without paying tariffs.

The metal is used for lampposts and road signs on British streets and highways.

Any Turkish steel imports above the quota are hit with a 25% duty aimed at protecting British firms from foreign competitors.

But UK producers say the Turks are sending thousands of tonnes of steel beyond the agreed limit – meaning tariffs should be paid.

However, the metal is held in “bonded warehouses” in Britain and not released for use until the next quota period opens – allowing Turkish firms and the British traders who import the product to dodge the duty.

Once the new quota period begins, import traders sell the steel in the UK without the price being raised by the anti-dumping tariff – making a mockery of a measure designed to protect UK workers, say critics.

The practice is legal but unfair, according to British industry insiders.

Importers benefit because the quota-busting metal is often sent from Turkey when raw materials cost less – meaning the steel is cheaper to produce.

In comparison, British steelmakers may have manufactured their product with raw materials which were more expensive – making them pricier and less attractive to consumers.

On average, the UK imports about 1.4 million tonnes of hollow section tubes from Turkey every year.

One industry chief told the Mirror the quota covering January to March filled within two days of opening.

The next window opens on April 1.

They said: “Any material arriving from Turkey now – after the quota has been reached – will automatically go to a bonded warehouse.

“They are all across the UK.

“On April 1, people will be awake at 12.01am whacking in on the HMRC portal the imports they want to allow out to the market.

“That will be material purchased three, four, five months ago.

“The tariff should be applied when the material physically arrives.”

Once a new quota period begins, traders release the steel from bonded warehouses and “flog it on for quick money”, the industry executive said.

They told how a tonne of hollow section tubes cost about £550 in October but about £700 today.

However, when British companies send their product to market, they compete with metal brought in three months ago at the lower price and just released from a bonded warehouse.

Because it cost £550 when it was imported, it can be sold for less than the £700-a-tonne British product and still make the import trader a handsome profit.

Community steelworkers’ union called on HM Revenue and Customs to crackdown on the practice.

General secretary Roy Rickhuss said: “This Government’s unwillingness to implement the rules on foreign imports is damaging our steel industry and could have serious repercussions for jobs and communities.

“The import quotas exist to protect domestic industry from unfair steel trading practices.

“If, as we are seeing, they are not enforced properly, our steel companies are forced to compete on a playing field that is not level.

“Government must take urgent action to end the practice of bonded warehouses being used to undercut UK steel producers by avoiding paying duties on foreign steel imports.”

UK Steel director-general Gareth Stace said: “Increasing import pressures are seeing three-month quotas used up in a matter of days, with more steel sitting in warehouses waiting to flood the market at the start of each quarter.

“It doesn’t bear thinking about the damage that could be done to the UK steel sector if the Government chooses not to extend safeguard measures later this year.

“With the EU and US continuing to protect their steel markets, the UK needs to follow suit.

“Global overcapacity in steel production remains a major issue and as long as these underlying conditions exist, governments of free trading nations, such as the UK, must be prepared to take necessary action.

“The Government need to ensure that we have a robust safeguard regime in place to keep the UK steel sector competitive and guard against major surges of imports.”

Labour MP Jessica Morden, who chairs Parliament’s cross-party group on steel, said: “It’s wrong that UK steel producers are being undercut by overseas companies because of this loophole.

“On so many issues – from energy costs to procurement, and in this case trade – all our steel industry is asking for is a level playing field with competitors overseas – something they’re not getting at the moment.

“An overdue clampdown on the use of bonded warehouses would be the very least this Government could do to signal that it’s serious about supporting our UK steel industry.”

Defending the use of bonded warehouses, a Government spokeswoman said: “There is no reason why a business cannot import anything to a duty suspensive regime (such as a customs warehouse) and then release at a later stage.

“Goods kept in customs warehouses are not competing on the market against UK businesses, up until the point at which it is released.

“As this is not done until there is quota available again, then there is no circumvention of the quota volumes.”

The Mirror has been campaigning to Save Our Steel since 2015 when the industry was battered by plant closures and thousands of job losses.