Electricity prices ‘threaten UK steel's ability to compete with Europe’
9 Oct 2019
The UK’s steel producers pay two third more than their German counterparts for electricity and 80% more than their French rivals, suggests a new report.
Trade association UK Steel’s publication The Energy Price Gap: A New Power Deal for UK Steel warns that British manufacturers are still seriousl6 disadvantaged despite a fall in wholesale electricity costs.
German and French steelmakers pay £19/MWh and £22/MWhless respectively meaning the UK sector must shoulder an additional cost of £47 million a year compared with the Germans and £55 million compared with France, if it wishes to achieve price parity.
Gareth Stace, UK Steel director general, said:
“Our new report plainly demonstrates that UK steelmakers face systemically and persistently higher electricity prices than our competitors. Electricity is one of the biggest costs for the steel industry and it damages our competitiveness that we are consistently forced to pay significantly more.
"This year, the disparity has cost the steel industry £47 million, at a time where the sector is already facing wider market uncertainties and trading difficulties."
UK Steel noted that the disparity contrasted with the Conservative Party commitment in its last election manifesto to “deliver the lowest energy costs in Europe”.
The association warned that the UK’s imminent departure from the European Union made it more imperative than ever to redress the balance.
The disparity has cost the steel industry £47 million, at a time where the sector is already facing wider market uncertainties and trading difficulties
Gareth Stace, director general, UK Steel
Its director general added that his organisation had outline “nine clear-cut recommendations” to close the price gap focused on exemptions, lower network costs, renewables compensation and tracking national energy price disparities.
“Every proposal has been implemented by EU Governments, showing that they could easily be introduced here too,” he said.
“Governments elsewhere in Europe recognise the critical importance of competitively priced energy for steel production and have acted decisively to deliver it. It is high time that the UK Government does the same."
UK Steel Sector in Numbers:
Produces 8 million tonnes of steel a year, around 70% of the UK’s annual requirement
Employs 31,900 people directly in the UK and supports a further 52,300 in supplies chains and local communities
£1.6 billion direct contribution to UK GDP and supports a further £3.9 billion in supply chains and local communities
£3.2 billion direct contribution to the UK’s balance of trade
96% of all steel used in the UK is recovered and recycled