Tata Steel plans to sell its loss-making UK business, the Indian company confirmed on Tuesday night.
It has told its European holding company to “explore all options for restructuring”, including the partial or entire sale of the UK operations.
The move puts the jobs of thousands of UK workers at risk.
The Indian company held a board meeting in Mumbai on Tuesday at which it made the restructuring decision.
Tata said that trading conditions had “rapidly deteriorated” in the UK and Europe due to a global oversupply of steel, imports into Europe, high costs and currency volatility.
“These factors are likely to continue into the future and have significantly impacted the long-term competitive position of the UK operations,” the statement read.
A joint statement from the UK and Welsh governments said: “We remain committed to working with Tata and the unions on a long-term sustainable future for British steel-making. Both the UK and Welsh governments are working tirelessly to look at all viable options to keep a strong British steel industry at the heart of our manufacturing base.”
Labour leader Jeremy Corbyn said: “Ministers must act now to protect the steel industry and the core of manufacturing in Britain.”
Plaid Cymru leader Leanne Wood said that her party wanted the Welsh Assembly to be recalled to discuss the crisis – a call that was echoed by Welsh Conservatives leader Andrew Davies.
Union leaders had travelled to India in a bid to persuade Tata to keep making steel at Port Talbot and other plants including Rotherham and Corby.
Roy Rickhuss, general secretary of Community, said: “Our worst fear that Tata would announce plant closures today has not been realised … It is vitally important that Tata is a responsible seller of its businesses and provides sufficient time to find new ownership.
“There is also a crucial role for both the Welsh and UK governments to do all they can to ensure a future for Tata’s remaining UK steel businesses and to provide every assistance to secure a buyer that will continue steel making.”
Len McCluskey, general secretary of the Unite union, said: “This is a very dark day for the proud communities and a proud industry which is now on the verge of extinction in this country.”
Dave Hulse, national officer of the GMB union, said the news was “absolutely devastating”, adding: “Tata has let the whole of the UK steel industry down.”
In January Tata announced more than 1,000 UK job cuts, including 750 in Port Talbot, where it employs 4,000 staff and a further 3,000 contractors and temporary workers.
The company has blamed fierce competition from cheap Chinese imports, regulatory costs and the strong pound for losses at its UK steel business.
Other factors affecting the wider UK steel industry include relatively high energy prices and the extra cost of climate change policies, as well as competition from China.
There have been allegations that Chinese steel is being “dumped” on world markets at prices that UK plants cannot hope to compete with.
At the same time China’s economy has remained sluggish, meaning that the demand for steel from its construction sector is now weaker.