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Big investment, large orders and celebrations; after some grim years, the steel industry in north-east England and Yorkshire is enjoying a reversal of fortunes.

Tuesday's scheduled export from the River Tees of the first steel slab made on Teesside for more than two years is the latest positive news.

 

In a sector where closures and redundancies had become the norm in northern England, Sahariviya Steel Industries of Thailand has created more than 1,000 jobs and pledged $1.1bn of investment in the former Teesside Cast Products site since acquiring it in March 2011 in a $469m deal. It now directly employs nearly 1,800 people on the site, where the Redcar blast furnace was relit last month.

 

Across the River Tees, Tata Steel's Hartlepool pipe mill has announced two Gulf of Mexico deepwater oil pipe contracts together worth about £150m, helping to secure jobs. Hartlepool's three mills employ 700 people.

 

And Tata Steel, which sold Teesside Cast Products to SSI of Thailand, is investing £400m in its long products business over five years to 2016, to move it into higher-margin products of semi-finished steel.

 

The business includes Scunthorpe, where two of four blast furnaces are in operation providing feedstock both for Scunthorpe's production of rail, plate, sections and wire rod, and supplying other businesses in Teesside, Scotland and France.

 

Tata employs about 7,750 people, including contractors, across Yorkshire and Teesside. That is 3,000 fewer than in 2008 when global downturn struck. However, it has recently recruited several hundred people at its speciality steels business in Rotherham and Stocksbridge, near Sheffield. The Rotherham operation melts steel scrap and alloys to create high-quality steels for use in industrial sectors including aerospace and oil and gas.

 

Positive though this recent upturn is, it comes against a backdrop of a big contraction of the UK steel industry over the past 40 years and growth in global capacity, particularly in China.

 

According to MEPS International, a global independent consultancy specialising in steel industry data and analysis, in 1970 the UK's crude steel production was 27.8m tonnes. China produced 18m tonnes that year out of a total global output of 595m tonnes. In 2011, the UK output was 9.4m tonnes and China’s 683m tonnes, out of 1.49bn tonnes produced globally. By tonnage, the UK slid from fifth to 18th in global ranking.

 

Peter Fish, a steel sector expert and founder of MEPS, says the UK's best strategy now is to invest in improving existing operations. Investments such as SSI's give a fillip, he says. "When it's operating at full capacity it will be providing more than a quarter of the UK steel industry."

 

MEPS is a product of the UK's steel heritage. Founded by Mr Fish in 1979, it remains in the city because there remains "a pool of people who are highly knowledgeable about the steel industr", he says.

 

Today, Sheffield's relatively small steel sector focuses on converting scrap into stainless steel, invented in the city in 1913.

 

Outokumpu, the Finnish steelmaker, occupies a former British Steel works where it employs 400 people. The site, operating near its 350,000 tonnes annual capacity, melts scrap to produce high-grade output for finishing at company mills in Sweden and the US.

 

ELG Haniel, a German-owned business, also turns scrap to stainless steel bars, blocks and slabs, and has spent heavily on its two Sheffield plants with a new furnace and compactor. And in Rotherham, CF Booth, a third-generation family business, melts everything from trains to trucks to produce steel plates, girders and ingots.

 

George Kilburn, secretary of the Cutlers' Company, representing South Yorkshire manufacturers, says: "Where there is innovation and high quality, companies are doing well. If it is 'pile it high and sell it cheap', life is difficult."

 

But this remains a challenging marketplace. The World Steel Association last month forecast that steel use was likely to fall 1.2 per cent in Europe in 2012. The downturn, it says, has left surplus European capacity of 30m-40m tonnes.

 

This is worrying for the UK's steel sector, which, says Tata, faces power prices twice those in France and 20 per cent higher than Germany's. The UK government's carbon price floor and renewable obligations policies are largely responsible, it says. Measures to relieve pressure on energy-intensive industries remain uncertain, according to Tata. "There is a large section of cost that is to do with government regulation. That proportion is growing."