David Cameron urged to raise issue of 'steel dumping' to Chinese President Xi Jinping

Cheap dumping in China is driving down the price of steel worldwide

Steam rises from the blast furnaces at the Tata owned steel works in Port Talbot, Wales (Getty)

The Prime Minister is being urged to raise the issue of the "dumping" of cheap steel with the Chinese president amid fears of fresh job losses in the industry.

Caparo is understood to be set to go into administration, although there is no indication how many jobs will be lost.

Sources had warned that up to 1,800 jobs could be affected, but it is now believed that workers will continue to be paid while the administration process proceeds.

Any cuts would hit several parts of the UK, including the West Midlands.

The firm, which is owned by Labour peer Lord Paul, produces a number of steel products.

The news comes ahead of an expected announcement on Tuesday by Tata, confirming 1,200 job losses at steel plants in Scunthorpe and Scotland.

Prime Minister David Cameron has been urged to raise the issue with Chinese President Xi Jinping (Getty)

Angela Eagle, shadow business secretary said: "This is a further blow to the steel industry which is now on its knees, and my thoughts are with the employees of Caparo who are facing uncertainty over their future.

"The industry needs urgent action from the Government. However, this Government seems content to let the industry fail.

"Rather than setting up more talking shops, the Government should be taking action to tackle higher energy prices, they should be providing export and procurement support and be looking at what temporary measures could help the industry, including looking again at business rates.

"With the Chinese president in the UK this week, I hope the Government will raise the issue of anti-competitive dumping which is driving down steel prices."

Roy Rickhuss, general secretary of steelworkers' union, Community, said: "This news is another devastating blow to Britain's steel industry. Caparo's workforce produce high quality finished steel products and has been battling against an increasingly challenging global market.

"This news is a tragic reminder of the urgent need for government action to help our steel industry survive. Crippling energy costs and the dumping of cheap Chinese steel is threatening the very future of the UK's steel sector.

"We will be working to support our members within Caparo at this difficult time and are seeking an urgent meeting with the company to understand exactly how this announcement will impact the workforce.

"This is an industry-wide crisis. It is vitally important that Britain's steel companies hold their nerve and that government works with unions and the industry to build a sustainable future for UK manufacturing with steel at its heart."

Trade body UK Steel said the issue of Chinese steel should be raised during the visit of the Chinese president from tonight.

Director Gareth Stace said: "If the worst is confirmed with further job losses in the steel industry, I would hope the Prime Minister would use the opportunity of this week's visit to raise the issue of Chinese dumping of steel.

"As well as reinforcing the need for the EU to tackle unfair dumping of steel across Europe, Mr Cameron's intervention would send a powerful signal to Beijing that he is prepared to stand up for British steelmakers.

"If the Prime Minister can make headway on this, and the Business Secretary can act quickly to tackle spiralling energy costs by compensating the industry for the various levies that penalise it, we may start to give the steel industry some confidence that the Government is supporting it before it's too late."

PA