Some 2,000 jobs at its Teesside Cast Products have been at risk since four international steel buyers walked out on an agreement with the site last month. Talks between Corus and the buyers are continuing and Corus is also planning to sue the consortium for breach of contract.

Regional manager of manufacturing group EEF, Tony Sarginson, said: “This could not have come at a worse time for the industry and job losses at Teesside’s steel plants will undoubtedly have a big knock-on effect on other suppliers in the region.” Michael Leahy, general secretary of the Community union, said: “It’s devastating news for our members and their families in steel communities right across the UK.”

Downing Street said Business Secretary Lord Mandelson had written to the company offering £5m in training support for workers losing their jobs.

Andrew Sugden, right, membership and policy director at the North East Chamber of Commerce, described the news as “a real blow” which underlined the gravity of the global steel industry slump.

He said: “This has been an incredibly deep, incredibly vicious recession. Steel has taken a disproportionate hit.”

He said it was “too early” to say what the supply chain impact would be from an announcement which would “knock industry confidence”.

David Robinson, right, chief executive of PD Ports, said: “This is disappointing news but unfortunately it’s symptomatic of very difficult trading conditions faced by Corus and the steel industry in general.

“The company must protect the long-term viability of its business.”

Last month PD Ports told its 600 workers that 120 job cuts are likely if the TCP plant at Redcar shuts.

Annually Corus exports more than 2 million tonnes of steel slab from Teesside after PD Ports invested £2m in a rail link from the TCP plant to Teesport.

Mr Robinson added: “The job losses have been in the long products division of Corus, this is not the signal that Teesside Cast Products is closing.”

Alan Clarke, chief executive and chairman of regional development agency and chairman of the Corus Response Group, said: “This news is a blow to the dedicated workforce at the four North-east plants and is a reflection of the very tough global market conditions facing the steel industry at present.

“The Corus business is a cornerstone of the regional economy and the support available through the Corus Response Group will be extended to each and every worker impacted by today’s announcement.

“The group was convened to support workers at the Teesside Cast Products division of Corus in Redcar which are presently striving to win new orders for that plant.

“I know how difficult a decision the announcement has been for Corus which has examined all other possible options to maintain the competitiveness of the Long Products business.

“The workers and their welfare are the primary concern of the response group and we are already talking with management to detail the support we can give to affected workers.”

Liz Mayes, assistant regional director, CBI North East said: “This is clearly very disappointing news for the region.

“This illustrates the real difficulties facing the steel industry and we will continue to do all that we can through involvement with the Corus Response Group to support Corus, its employees and its supply chain through these difficult times.”

Business Minister Pat McFadden added: “This is very disappointing news for those affected.

“We understand the difficulties that the company is facing caused by an extreme downturn in demand for steel around the world.

“It is restructuring as it seeks to match production to lower demand and to position itself for to the future.

“The Government is committed to ensuring UK industry has what it needs to tackle the challenges,” he added.

“We are working with Corus to try to secure the future for as many workers as possible.

“I met with Corus chief executive Kirby Adams last week to discuss the pressures the company is facing as demand has failed to pick up with company projections.

“Lord Mandelson has also written to Corus to offer up to £5m of training support to secure jobs across Corus sites.”