"China has far too much capacity in steel that has to be cut substantially before any real recovery can happen in steel prices over the longer term ... The Chinese have indicated that they wish to cut, they haven't yet done it. So we wait to see what happens going forward," Jeremy Wrathall, head of global natural resources at Investec, told CNBC Thursday.
"Any rise in steel (prices) prolongs that agony because people (think) maybe there's a chance of a permanent recovery."
Forty thousand jobs are estimated to be at risk in the U.K. with the main focus being Tata's steel mill in the Welsh town of Port Talbot. The ruling Conservative Party has said that a public sector takeover is rarely the right answer despite calls from leftists politicians and union members.
A Financial Times editorial this week urged against nationalization while leftist author Paul Mason believes it should become a mutually owned business, with permanent state support, and points out steel's usage in the U.K. defense sector.
Potential private buyers are a little lukewarm on the idea of a deal despite mills like Port Talbot having some strategic assets amid their loss-making business. Liberty House Group, which is in the process of buying some Tata plants in Scotland, told CNBC that the scale and timing of Tata's decision to sell was much more dramatic than anyone was expecting.