Tata Steel has warned that the finances of its UK business face "material uncertainty" given market conditions and the level of government support. Tata said a stress-test of its European arm to assess the impact of a downturn had flagged concerns for the UK unit.
However, Tata Steel UK said it expected trading to pick up later this year. The Department for Business said the government is providing support to protect the steel industry from "unfair trade and energy costs".
The UK business of India's Tata Steel employs about 8,000 people, with half at the Port Talbot steelworks in Wales. In results published last week, Tata said that earnings at Tata Steel Europe - which includes the UK business - fell by more than 60% in the year to 31 March.
It added it had carried out tests to assess the potential impact of an economic downturn in Europe, given factors such as higher inflation and interest rates. These tests found the outlook for the UK business would be "adversely impacted", but it added it was continuing to "implement various measures aimed at improving its business performance and conserving cash".
In July last year, Tata Steel said it would make a decision over the future of the its UK business in the next 12 months. One uncertainty hanging over Tata Steel UK is what level of help it could get from the government.
The company is still in talks with the UK government over support to switch away from existing steelmaking processes to ones that emit less carbon.