British Steel Scunthorpe rolling may stop if BF closes

British Steel's Scunthorpe rolling mills may not be able to continue operating if the last blast furnace (BF) closes.

The rolling lines are powered by gas captured from the BF process. Recent furnace stability problems and the subsequent lack of gas mean the company has been intermittently operating some lines. It is currently running one BF, which it has fed with stocked raw materials.

"If they shut the last blast furnace and import semis they would have to put some liquid gas solution in place and modify the reheat furnaces to be able to run on this different gas supply," a source said.

The move to one furnace and reduction in gas supply has already affected availability of some products, and service centres expect tight universal channel supply in the coming months as the company opts for heavier, less lossmaking products.

Production at Skinningrove and Teesside could continue, as both sites already have gas supply. But rail production at Scunthorpe would cease without any investment in gas supply. Rail is one of the more profitable businesses in the group, and also important for the wider UK as it is a major supplier to Network Rail.

Some market participants are gearing up for Jingye, the Chinese owner of British Steel, to walk away. Executives from British Steel, and local politicians, are visiting China for discussions with Jingye, sources suggest.

A spokesperson for British Steel refused to comment on "hypotheticals". "We are in ongoing discussions with the government about our decarbonisation plans and the future operations of our UK business. While progress continues, no final decisions have been made," the spokesperson said. A decision on the BFs could be made in the next few weeks, with them both potentially closing before Christmas, sources suggest.

Speaking in Parliament earlier this week, business secretary Jonathan Reynolds said he was "heavily constrained" in his options for British Steel and operating on a shorter time window than the previous administration.

The Chinese market has weakened considerably in recent months, which will have affected Jingye financially, along with all other mills, sources said.

By Colin Richardson