Hinkley Point a boost to UK steel, but not a game changer

* Project will need at least 1 mln tonnes of steel: experts

* Steel needs will be spread over nearly a decade

* UK firms will not supply all of the steel needed

* North European steel prices: http://tmsnrt.rs/2cK6HGN

* UK economic output by industry: http://tmsnrt.rs/2d4tTz8

* http://tmsnrt.rs/2d922tx (Updates story from Sept. 22 with comment from Areva (LSE: 0P4A.L - news) )

By Maytaal Angel

LONDON, Sept 22 (Reuters) - UK steelmakers are likely to win deals to supply the 18 billion pound ($23 billion) nuclear power plant at Hinkley Point, although that may not be enough to bolster Britain's troubled steel sector, industry experts say.

Helped rising steel prices and a falling pound making exports more competitive (.HRC-NED=SI), UK steel firms are emerging from a crisis that has cost around 5,000 jobs, or a fifth of the workforce, since last October.

Britain approved the China-backed Hinkley Point project last Thursday.

But Britain's steel industry says it needs more infrastructure projects, lower energy costs and, crucially, more measures to prevent dumped or subsidised steel from China and elsewhere from entering the country.

"It's good (news) ... but I don't think a Hinkley Point can sustain British steelmaking for the next decade," said Ben Orhan, senior economist at consultants His.

EDF (Paris: FR0010242511 - news) , the French utility that will build Hinkley Point C in southwest England, has said more than 60 percent of construction spending on the project will go to British companies.

Wales-based Express Reinforcements was named preferred bidder to supply Hinkley Point with 200,000 tonnes of reinforcing steel, which it will source from Celsa Steel UK.

This is 25 times more steel than was used in London's Olympic Stadium and is worth $84 million (.RCB-NED=SI), according to Reuters calculations based on current steel prices.

EDF declined to comment on Hinkley Point's total steel needs, but even if, as some experts expect, the project will require at least a million tonnes of steel, this will be spread over nearly a decade.

That is a fraction of the 10.8 million tonnes of steel produced last year in the UK, according to the World Steel Association.

TRADE DEFENCES

EDF also declined to comment on whether Chinese steelmakers will supply the project, though some say they might given that Hinkley Point is backed by $8 billion worth of Chinese funding.

The European Union has ramped up trade defences in steel over the past couple of years. It currently has 37 anti-dumping and anti-subsidy measures in place for steel products, 15 of them concerning China.

Since April, British government rules mandate that all public sector projects must consider the social and environmental impact of the steel they source, and cannot just opt for the most cost-effective bidder.

"This is the first major project announced since the (government) procurement rules changed. As such it is the first test for government," Gareth Stace, head of industry group UK Steel, said.

The British government said Hinkley Point was not a public sector project, but added: "UK companies have already been successful in securing over 250 million pounds of manufacturing contracts ... and 64 percent of the (Hinkley Point) construction value is expected to come from British companies."

EDF has said the largest forgings, used in the nuclear reactors, will be procured overseas because UK steelmakers do not produce them.

French nuclear group Areva told Reuters it will supply forgings for Hinkley Point. In July, EDF signed a memorandum of understanding with Areva about acquiring a controlling stake in the group's reactor business.

Areva was not immediately available to comment.

Tata Steel UK, Britain's largest steelmaker, said it has the capacity to supply much of the high-quality steel required for Hinkley Point.

"We hope the wider value of using local supply for projects like this is fully taken into account," a Tata spokesman said.

The UK's Liberty House Group said it will look to supply products like plates for Hinkley, while British Steel, owned by Greybull Capital, makes construction steel 'sections' and is expected to bid. It was not immediately available to comment.

EDF estimates it will need 600,000 embedment plates and about 50,000 tonnes of structural sections.

"Whenever something big comes up people get excited but we need a multitude of infrastructure projects," a UK-based steel industry source said. "No one project is ever going to solve an industry's problem." ($1 = 0.7651 pounds)

(Additional reporting by Susanna Twidale; editing by Pratima Desai/Ruth Pitchford)