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In the News

Steel industry - Port Talbot steelworks owner reports £347m loss

Geoff Riley

2nd September 2021

There are so many micro and macro aspects to this news story about continued heavy losses at the UK operation of Indian conglomerate Tata Steels.

Operating losses are a shade under £1 million per day which seems big enough except that this represents an improvement on the previous year when losses exceeded £600 million.

The pandemic-induced collapse in investment spending caused a steep fall in the derived demand for steel in a sector already experiencing excess capacity.

Steel demand is picking up but Tata is now facing up to higher costs that are Brexit-related including import tariffs on some raw materials, increased logistics costs - few industries these days seem immune from the chronic shortage of qualified HGV drivers.

And as an interesting side issue, Tata Steel has had to borrow money to help fund the purchase of carbon credits since the steel industry remains - for the moment - part of the EU carbon emissions trading scheme.

​This revision video uses cost and revenue curve analysis to examine how a fall in industry demand can impact profits of businesses.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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