Fastest growing markets for UK iron and steel exports now outside Europe

New research, commissioned by Wyelands Bank, reveals Pakistan, Turkey and India are the UK’s fastest growing export partners for iron and steel. Exports to these markets are expected to grow by 5.9%, 1.4% and 0.9% respectively in the years to 2021.

Iron and steel exports to these three markets were worth $1.4bn in 2017 and the projected growth could generate an extra $29m a year for the industry’s exports.  

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Alongside Turkey being one of the fastest growing markets, it is now the UK’s largest export market for iron and steel exports.  Iron and steel exports to Turkey have increased by 14% in the last ten years.  Exports to Turkey were worth $815m in 2017, some £100m more than in 2007 when exports to Turkey were worth $715m.

Turkey has become an export partner for the UK, partly because of its infrastructure development fuelled by its economic growth, and partly because the country is a staging post between Europe and the Middle East and Russia.  Turkey itself provides highly technical drilling and extraction equipment into the Middle East and North Africa region and is dependent increasingly on imports from countries like the UK.

The remaining largest markets are the USA ($682m), Germany ($475m), previously the UK’s largest market, Spain ($434m), and France ($384m), making up the remaining top five export markets.  India is the UK’s sixth largest market, while Sweden ($328m), Ireland ($294m), the Netherlands ($255m), and Pakistan ($246m) make up the remaining markets in the top ten.     

Meanwhile, iron and steel exports to Germany have decreased by two thirds over the period from $1.5bn to $475m.  The pattern is similar for Spain and France where exports have declined by $666m and $591m respectively over the ten years from 2007 to 2017.

The decline in exports to Europe can be accounted for by depressed growth in the region until the last two years, but also in terms of a shift in consumption in Europe away from UK manufactured iron and steel.  This is reflected in the rates of growth in the UK’s top export destinations.

Iain Hunter, CEO of Wyelands Bank, said: “Metals exports are at the heart of manufacturing production globally. The iron and steel sector in particular is vital in producing components for all industries, as well as consumer goods.  We can see how the UK’s largest export markets are changing as countries and their economies develop over time.”  

Wyelands Bank, set up to help businesses trade, grow and create jobs, commissioned the research to better understand the role of imports and exports in the UK economy.  It was prepared in collaboration with Global Trade Review, the leading trade and trade finance media company, and Coriolis Technologies, the trade data company, which has provided the data.

The wider metals sector

The UK metals industry as a whole accounted for 4.4% of total UK exports in 2017.  There are 21,610 companies in the sector as a whole which employed 609,499 people in 2017 and had a total turnover of £119.7bn.

Some 17,617, or more than 80%, of companies in the metals sector are SMEs.  The largest ten companies account for 55% of turnover and 44% of jobs in the industry.

Iain Hunter, CEO of Wyelands Bank, continued: “We can see how important SMEs are to UK trade, given the significant contribution (80%) make to this metals sector.  SMEs are often ambitious and entrepreneurial.  In addition, they are an important source of innovation. Smaller companies – especially in manufacturing – play an important role in the UK’s capacity to form part of global supply chains, as these metals businesses demonstrate.”

The UK base metals sector as a whole had a trade deficit of $6.4bn in 2017.  Imports were worth $24.4bn and exports $18bn.  The deficit has more than doubled since 2010 when it was $2.7bn. 

Iron and steel is the largest metals sector within the UK, closely followed by iron and steel products, which is higher up the value chain. The UK had a moderate trade surplus in iron and steel products in 2017, reflecting the higher end of the value chain that the UK’s sector operates in. Imports of iron and steel products were US$5.1bn and exports were US$5.4bn. Imports of aluminium are nearly twice as high as exports at US$4.7bn compared to US$2.6bn respectively.

The UK is one of the most open economies

Trade accounts for 58% of UK GDP; in 2016, the UK exported goods worth US$433.5bn and imported goods worth US$678.1bn. This makes the UK economy one of the most open in the G20, and is more than China, America and Japan.

Regional growth from Asia Pac and South America

Looking at the regional picture for UK exports, Europe remains the UK’s biggest trading partner for exports with a 46.3% share. North America is next with 17.2%, while Asia Pacific (7%), Sub-Saharan Africa (5.4%), Mena (1.8%) and South America (1.2%) follow.

However, the fastest growing market is Asia Pacific, where exports are expected to grow at 3% a year to 2021. South America, with UK exports expected to grow by around 0.5% annually until 2021, is the second fastest growth region.

Iain Hunter, CEO of Wyelands Bank, added “Behind these headline economic figures, trade is important because it creates jobs. It has helped to contribute to the UK’s record employment levels, providing financial security for millions of families up and down the country.

“However, in order for businesses to succeed, they need working capital. It is only by providing better access to funding that we can support businesses to trade, grow and create jobs.”

The analysis is based on the trends and patterns in trade flows which is projects forward.  It does not account for potential political or policy changes.

 

Additional Info

About Wyelands Bank

Wyelands Bank partners with businesses to support industrial growth, enable businesses to trade more easily around the world and to create jobs.  It provides working capital to businesses and will provide savers with competitive and attractive products.

The bank is owned by SKG Financial Holdings PTE Limited which has been set up and funded by the Gupta family.  SKG Financial Holdings PTE Limited is ringfenced and run with an independent structure and governance.

Wyelands Bank Plc is authorised by the UK Prudential Regulatory Authority and regulated by the Financial Conduct Authority and the Prudential Regulatory Authority.  It has regulatory approval to raise retail deposits in the UK and Germany.  Wyelands Bank Plc is registered on the Financial Services Register and is a company registered in England and Wales.

About the research

The data provided here is publicly available from the United Nations, OECD and Eurostat, for every trading jurisdiction in the world.

It creates a consistent picture of trade globally.  It “mirrors” the trade flows. That is, it looks at trade between two country pairs and averages out the difference between the two reporting countries in favour of the better reporting country for each sector.

This is replicated for every country and every sector flow creating a trade database handling 3TB of data at anyone point in time.

The values are reported in US dollars to make comparisons consistent thus they will differ from those published by the UK government. From 2017 onwards, the data is projected on the basis of trends in the data. There are no assumptions thus the results are entirely neutral.

References to SMEs are based on a definition of small and medium businesses as having up to 250 employees, turnovers of €50m or balance sheets of up to €43m.

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