Commenting on the Government’s energy announcement, Director General of UK Steel, Gareth Stace, said:“The Business Secretary’s announcement today demonstrates that this new Government understands the sheer scale of the issue and the need to deliver a significant solution swiftly. Setting a price cap for electricity at £211/MWh for six months gives foundation sectors, such as steel, the chance to get through the winter by giving us a competitive business landscape. The Government has clearly listened to sectors such as steel, estimated the enormity of the challenge that energy intensive sectors face, and today has delivered.
“It is essential that Government is now ‘fleet of foot’ if the situation develops further to ensure that British business is competitive within Europe and across the World. If we have parity on energy prices, then we can make steel competitively and provide well-paid and highly skilled jobs in areas of the UK where governments have more recently looked to level up.
“The Government must now move to rapidly reform the energy market to ensure longer-term competitive price beyond the current price cap. The steel industry stands ready to work with Government to demonstrate the benefit that the announcement today will have on our foundation sector and to reform the energy market so that we are not in the same position this time next year.”
- Steel production and processing is an incredibly energy intensive process, with energy making up a substantial proportion of the cost of converting globally priced raw materials into finished steel products for consumers.
- The price of electricity directly impacts competitiveness and which price UK steel producers can sell their steel at on the global market. It also affects the ability to attract investment and, longer-term, to decarbonise.
- The UK steel industry’s electricity use is equivalent to 800,000 homes, and gas use is comparable to 400,000 homes.
- Prior to today’s intervention, UK Steel analysis showed that UK steel producers faced significantly higher electricity prices than their European competitors, with the price disparity skyrocketing since energy prices increased.
- The price cap is at 4-5x the historical average, but the critical issue for the steel industry is competitive electricity and gas prices, in line with European and global competitors.
About UK Steel: UK Steel is the trade association for the UK steel industry. It represents all the country’s steelmakers and most of downstream steel processors.
The UK Steel sector:
- Produces 7.2Mt of crude steel a year, around 70% of the UK’s annual requirement (annual demand of 10.5Mt)
- Employs 34,500 people directly in the UK and supports a further 43,000 in supply chains
- The median steel sector salary is £37,629, 45% higher than the UK national median and 59% higher than the regional median in Wales, and Yorkshire & Humberside, where its jobs are concentrated
- Directly contributes £2.4 billion to UK GDP and supports a further £3.1 billion
- Directly contributes £2.4 billion to the UK’s balance of trade
- 96% of steel used in construction and infrastructure in the UK is recovered and recycled to be used again and again