HUGE losses made by Teesside steel firm SSI UK have prompted its financial backers to set aside extra money to cover future loans.

Thai Bank, Siam Commercial Bank and Tisco Bank helped to fund SSI's purchase of the former British Steel plant at Redcar for about £700m in 2011, and they have continued to support the business in its first three and a half years of production.

Since iron and steel making was restarted in April 2012 following a production hiatus of almost two years the plant has made more than nine million tonnes of steel slabs which have been shipped from Teesport to customers in the US, Europe and to SSI's parent company in Thailand.

Depressed global steel prices, however, have ensured the firm's Teesside operation has remained stubbornly in the red, and regular cash injections have been made by the plant's financial backers to help keep afloat the business which employs 2,000 people in the North-East.

SSI UK unveiled a £193.5m deficit in its last annual report which prompted company auditors to voice concerns about the future of Teesside steel, but plant bosses are hopeful that 2015 will see the business move close to profit.

Reports from Thailand said the country's central bank had instructed the three banks to set aside loan loss provisions of up to 60 per cent, up from 36 per cent previously.

"We booked extra provision for loans extended to SSI," Oranuch Apisaksirikul, the chief executive officer at Tisco group told reporters. But he said the debt was not bracketed as non-performing loans.

Pimolpa Suntichok, head of corporate business at Siam Commercial Bank told Reuters that provisions for SSI loans were included in the bank's overall provisions and Krung Thai Bank has taken similar action.

Analysts estimate that Siam Commercial and Krung Thai each loaned SSI about 20 billion Thai baht (£360m), while Tisco loaned four billion baht (73m).

SSI declined The Northern Echo's offer to comment on the reports.

In the meantime, the challenges facing steel producers around the world were highlighted by reports that iron ore prices had plunged to a six-year low. The commodity has struggled as the largest suppliers expanded production just as economic growth slowed in China. Reports last month from Shanghai said steel was now cheaper per tonne than cabbage. The wholesale price of white cabbage was $333 a tonne, whereas hot rolled coil steel was $319.