The UK metallurgical lobby has warned the government of an impending crisis due to soaring wholesale energy prices that could lead to long shutdowns in steel mills, cause additional CO2 emissions and wreak havoc in supply chains.
A shortage of natural gas in Europe has led to a sharp increase in electricity and gas prices, causing a sharp rise in the prices paid by people who heat their homes or large heavy industries that smelt steel.
“These unusually high electricity prices result in reduced or destroyed profits and therefore less reinvestment,” says UK Steel, a white paper lobbying for the UK steel industry. "As winter approaches, demand for gas and electricity will rise and prices will continue to rise, making it impossible to produce steel at a profit."
UK Steel said some businesses may have to shut down production "for ever longer periods, which will affect not only individual companies, but also the supply of steel to the UK economy and UK jobs."
Sudden shutdowns can damage equipment, increase costs and ultimately lead to "degraded environmental performance with higher emissions," the report says.