A STEELMAKER has denied it is scaling back North-East productions, but admits facing another tough year at the mercy of a subdued market.

Tata Steel says it is committed to driving forward its operations in the region, despite revealing losses of about £840m and writing down the value of its European division by £1bn.

The company, which employs about 1,500 North-East workers, blamed depressed European markets for a 30 per cent drop in pre-recession demand and final quarter net losses of around £780m, but renounced ongoing market speculation it wants to sell UK assets.

Last night, Dr Karl-Ulrich Köhler, Tata Steel Europe managing director and chief executive, said it expected another difficult year, with the steel industry's modest recovery stalled by last year's economic downturn.

Dr Köhler yesterday spoke at the firm's Indian headquarters, in Mumbai, where it revealed slight improvements in European operations, with deliveries in the final quarter rising to 3.42m tonnes, from 3m tonnes, though whole year deliveries fell slightly to 13m tonnes.

Tata's North-East operations include its Hartlepool pipe mill, which last year won a £100m order to supply a 214-mile gas pipeline in the Gulf of Mexico, and its special profiles plant in Skinningrove, east Cleveland, which provides steel for track shoes on earth moving vehicles.

Iain Wright, MP for Hartlepool, who earlier this year addressed Tata Steel bosses at a seminar in Surrey, said the results offered hope.

Mr Wright, shadow minister for competitiveness and enterprise, said: “They are saying they want to be a company in Europe that makes high-value products which can be exported around the world.

“The specialist pipe mill in Hartlepool does just that and the suggestion of looking at long-term production across Teesside gives real hope for the future”

However, Roy Rickhuss, from steel worker union, Community trade union, said worries remained over Tata's future.

He said: “While there are some indications of improvement, and the company have repeated there are no plans to cut investment or dispose of UK assets, the situation remains concerning to employees and their families.”

Dr Köhler revealed Europe's economic deterioration had impacted on deliveries, but said it was confident of addressing the shift.

He said: “We acted decisively and took £200m of fixed cost out of the business and reduced streel stocks to record lows by the end of the year.

“But we have increased the proportion of high-value products, which have risen by about 20 per cent in the last two years, and given us a firmer foundation as we enter another tough year of subdued steel demand in Europe.”