A buyer may have been found for Redcar's Corus plant, days before it is due to be partially mothballed with the loss of 1,600 jobs.
Middlesbrough's elected mayor, Ray Mallon, said a "credible" consortium had expressed an interest in buying the Teesside Cast Products plant from Tata.
Production is due to end on Friday, when the blast furnace is closed down.
Tata would not comment on Mr Mallon's announcement, but said it remained open to serious offers.
The site has been at risk since April 2009, when international buyers pulled out of a 10-year contract to buy steel slabs.
The mothballing would bring to an end 150 years of steelmaking on Teesside.
Unions have called the move premature and warned that industrial action could not be ruled out.
Mr Mallon, who has not revealed details about the consortium, said: "I do not want to raise false hope and there is a long way to go before any deal would be complete but this is a deal worth investigating."
He said he had shared the information with local Labour MP Vera Baird, who he said had now spoken to the consortium to try to "progress the matter".
Mr Mallon added: "It is too early to say whether we can save the steelworks but what I will say is that I believe the consortium is credible.
"For things to proceed further it requires Tata to be prepared to sell the steelworks and for them to open their books and allow due diligence to take place.
"It also requires the government to continue to pay the workforce for up to 90 days so that the plant is not mothballed but kept in an active state in which it can revert to full production swiftly and economically in the event of a deal being completed."
Tata said in a statement: "We don't comment on rumour or speculation.
"Mothballing means we will still be open to serious offers."
"We have been looking for a long-term investor in the plant for the past 10 months since the consortium of steel companies terminated our 10-year deal with them."