PABritish Steel is launching a consultation that could see the closure of its two blast furnaces at Scunthorpe, putting between 2,000 and 2,700 jobs at risk.
The company said the blast furnaces were "no longer financially sustainable" due to tough market conditions, the imposition of tariffs and higher environmental costs.
British Steel chief executive Zengwei An said it was "a necessary decision given the hugely challenging circumstances the business faces".
The GMB union called it "devastating news for the people of Scunthorpe" and called on the government to do "everything possible" to secure the future of steelmaking at the site.
British Steel has been owned by Chinese firm Jingye since 2020 and the Scunthorpe site currently employs around 3,500 people.
Since 2020, Jingye says it's invested more than £1.2bn into British Steel to maintain operations and claims it suffered financial losses of around £700,000 a day.
The company has been in discussions with the UK government for support for the operation but no deal has been agreed.
British Steel said it would "continue to work with the UK government to explore options for the future of the business".
The company said it would begin "formal consultation" with its workforce and unions from today over three options:
Unite union general secretary Sharon Graham, said the potential job losses were "a disgrace" and called for the goverment to work with it on a "sustainable way forward".
"British Steel is guilty of trying to hold the government to ransom, while using its dedicated workforce as pawns.
Business and Trade Secretary Jonathan Reynolds said he knew staff would be "deeply worried", adding "we will continue working tirelessly to reach an agreement with the company's owners to secure its future and protect taxpayers' money."
UK Steel Director General, Gareth Stace, said the consultation was a "pivotal moment for our sector".
He added: "The steel industry is officially in a crisis. UK Steel has been sounding the alarm," he added.
