STEELWORKERS in the North-East were handed a two-year stay of execution last night by owner Corus in its battle to turn around colossal debts.

The Anglo-Dutch firm dropped a bombshell yesterday when it announced the Redcar plant would stop supplying steel internally to other Corus operations.

Instead, it would have to sell its products on the global markets.

The news fell short of rumours that Teesside could be closed in radical restructuring plans.

Corus announced to the City in the morning that a further 1,150 jobs would be going across the group, with the bulk of the cuts (700) at operations in Rotherham and Stocksbridge, South Yorkshire.

More than 100 jobs will be cut at Llanwern, in Wales, and 220 jobs will go in the company's construction and industrial division - which may still impact on Teesside.

But the greatest concern centred on Teesside's ability to compete directly in the international market. The strength of the pound and competition from China and Russia will cause considerable headaches in the push to gain a share of the steel slabs market.

There were fears last night this would give Corus an excuse to close its Teesside operations if it failed to hold its own against competitors, many of whom are heavily subsidised.

But, in the face of allegations it was a "stealthy" way to dispose of the works, a Corus spokesman gave assurances the plant would have at least two years to establish itself as a global player.

Mervin Straughan, communications manager, said: "You have to give it a couple of years to gauge how well you are doing."

Union leaders questioned the time frame, saying it would take at least two years for Teesside's existing supply lines with Llanwern and Scunthorpe to be replaced.

Tony Poynter, chairman of the multi-union steel committee, said: "They want to use Teesside until they can replace supply elsewhere. That isn't going to happen overnight.

"When it does, they want to expose us to the global market, and that is where all the flaws are in this proposal.

"We produce the cheapest iron and steel within Corus, but that is different to the cheapest price in the world."

Former steelworker David Walsh, leader of Redcar and Cleveland Borough Council, said everyone on Teesside would fight to support the works.

"The reality is that if the Corus market is closed to Teesside, then the complete closure of what is left of steelmaking on Teesside can only be a few years away," he said.

"But we are not going to see steel die. We are going to point out forcibly and loudly the simple truth that our local works are highly productive."

Chairman Sir Brian Moffat, who retires next month, told the company's annual meeting in London yesterday that Teesside would cope with the change.

He said: "It is well placed to do so. There is a good market in the world and it is a growing market for steel slabs."

But workers were less convinced.

Matthew Lodge, 44, who has worked at the Redcar plant for 28 years, said: "When we heard there was an announcement today, we thought we would know definitely, but we are no further forward.

"I think it is still going to go, whether it is in six months or in two years.

"They have taken away our customers in Stocksbridge, and left us to sell on the open market with the likes of China, which is mass produced.

"We would rather know one way or the other - we have a life to get on with."