The company blamed the closure on global competition

Finnish giant Outokumpu is to close its Coil Products Sheffield (CPS) plant in Tinsley with the loss of 570 jobs as it switches production to Finland.

And 100 more jobs will be axed at the neighbouring melt shop as the company cuts capacity to cope with an oversupply of steel on global markets.

The CPS site is expected to close by the end of the first quarter in 2006.

The Engineering Employers' Federation (EEF) said the news was "a significant blow for the Sheffield area".

'Major loss'

EEF (Sheffield) chief executive Gordon Scott told BBC News: "This is a major loss to steel production in Sheffield, not only in terms of volume but also the quality of the product.

"But, however sad this news is, it is by no means the end of steel production in the area. We still have major producers based in the region, including Corus, which is the biggest in the UK."

In a statement, Outokumpu said consultation with the Sheffield workforce and the steelworkers' trade union Community would commence immediately.

Chief executive Juha Rantanen said: "Our aim in the next weeks and months is to work with union representatives to develop proposals that will support the transition of all CPS employees through this difficult time.

"We regret having to make the difficult decision involving our CPS colleagues.

"It is certainly not one that has been taken lightly, especially given the commitment and excellent effort of the CPS workforce over the years."

But he said the loss-making CPS site was a high-cost operation which could not compete with more cost-efficient rivals.