High energy costs are damaging global competitiveness, says UK steel industry

A report by UK Steel shows UK steelmakers face electricity prices twice those of their direct competitors in France and 50% more than German steel producers.

The Energy Price Scandal: A Fair Power Deal for UK Steel shows that in the UK, the average electricity price for steel producers this year is around £65 per megawatt hour (MWh), compared with Germany at £43/MWh and the French price of £31/MWh.

The report says that the disparity with German power prices will cost the sector £55 million this year. UK steel companies have committed to reinvest all of this back into production facilities should Government take action to level the playing field.

Creating steel using the more modern Electric Arc Furnace method uses more electricity than the traditional coal furnace method. The electricity needed for this process is enough to power a town with a population of 100,000.

UK Steel Director General, Gareth Stace said:

“It’s been a year since the launch of the Industrial Strategy and the Helm Review into the Cost of Energy, and we’ve made no progress, indeed we have gone backwards. The direct impact of higher electricity costs is being felt by the steel industry at a time of high market uncertainty with the UK leaving the EU and protectionist tariffs in place in the US. The price disparity continues to erode the industry’s ability to attract international investment – investments will instead be made in markets with more favourable conditions, further damaging future UK competitiveness.

“The Government needs to step up now to tackle this critical issue, matching the confidence and support supplied to industry by governments elsewhere in the EU.”

You can read the report here.