The “outright slaughter” facing the UK energy sector in the face of skyrocketing costs is being fully felt in the metal industry. The president of the manufacturers association Make UK, Stephen Phipson, warned this Thursday of the terrible situation facing the sector, whose costs have quadrupled in a matter of a month. “We are the laughing stock of Europe,” he lamented.
As has also happened in Spain, steelmakers have been forced to stop at times. But the British have been like this for six weeks, with breaks of several hours a day. British Steel CEO Gareth Stace lamented the skyrocketing light. “We have gone from paying 250 pounds a megawatt hour to more than a thousand last Friday,” he said. “The spikes are unbelievable, and they are now the norm rather than the exception. Prices can stay this high for several hours each day before going down,” at which point they can restart production.
The main problem facing the country, according to Stace acknowledges, is that its competitiveness has been seriously damaged, especially against its big rivals, such as Germany, whose prices are barely a third of what they pay on the island. “We are losing market share to foreign steel producers, and particularly those close to us because they can get the steel to our ports quickly. And it’s not just the EU, but also Turkey.” And rivals keep reminding them. “We have had steel producers who have laughed at us, saying, ‘We can flood your market with our steel because we are much more competitive than ever,'” Stace lamented.
The situation is especially damaging, because production at the drop of a hat, hour yes, hour no, supposes adding the costs of stopping and starting the plants, with the additional cost of wearing down the systems more and emitting more carbon dioxide than what they would emit if they were running steadily.
Government inaction
Make UK regrets that the Government has not done anything, despite the fact that the Minister of Enterprise and Energy, Kwasi Kwarteng, had promised to intervene 10 days ago. Their fear, Phipson explains, is that Finance Minister Rishi Sunak has decided to stop market intervention and leave companies alone in the face of danger.
The main effect of this price increase is being seen in British inflation: the hospitality industry already reports increases of 18% in its costs, and Phipson points out that the cost of the materials used by the industry has risen between 30% and a 40%. And what is worse: many factories have decided to pass the increases on to consumers, raising sales prices. “That tells me that now it is an inflation already incorporated into the product instead of a transitory increase that will disappear with time,” he laments. Britain’s competitiveness may take a long-term hit.
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