TATA Steel has moved its European business into the black, but bosses warned cheap Chinese imports threatened future performance.

The India-based group said its European operation, including mills and distribution plants across the North-East, had turned a pre-tax operational loss of £16m in 2013/14 into a £109.8m profit last year.

Karl Koehler, the Tata chief executive in Europe, said the improvement was down to a market differentation strategy and cost cuts.

However, the final figures for Europe will not be released until later this year following Tata Steel's decision to write down the value of the business by £500m. That move followed a write-down of £1bn two years ago.

Last week, the business announced a write-down on assets including its long products division, which includes Tata's Teesside Beam Mill, at Lackenby, near Redcar, and the Skinningrove special profiles plant, in east Cleveland, where it employs a combined 700 workers.

On Monday, the steel firm denied reports that the move signalled it was close to off-loading the loss making long products division to US tycoon Gary Klesch who is in talks over a possible deal. Tata has said that a decision on the deal is expected this spring.

Yesterday's trading update offered the firm some positive news amid very challenging times for steel producers across Europe.

Dr Koehler said: "We continued to make steady progress on our strategic transformation to become a customer-orientated, financially sustainable company despite weakening market conditions in the last six months.

"Our financial performance improved due to our market differentiation strategy, as well as wider market spreads and continued cost control. We launched 35 new products for customers during the year, including a premium quality surface finish for car body panels, a lighter-weight construction steel and a new steel grade for tractor wheels."

He concluded: “In the coming year we see opportunities to further improve sales through higher precision. EU demand is forecast to grow modestly again and the EU steel industry is in a stronger position to benefit than it was pre-crisis. But surging Chinese exports look set to remain a serious concern.”

Union bosses have warned a steel firm’s plants will be crippled by strike action unless management relent on changes to workers’ pensions.

Unite has demanded last-ditch talks with Tata Steel over proposals to close the British Steel pension scheme (BSPS).

The BSPS had 143,000 members as of late last year, with assets of about £13.6bn.

The union will start balloting members next week, with the move coming after similar action by the Community, GMB, and Ucatt unions.

If staff walk out, they will join the first national dispute in more than 30 years.

In total, Tata Steel employs about 1,300 people in the North-East out of a total UK workforce of 17,000.