UK Steel / EEF paper on energy costs and the steel sector
The announcement that Tata Steel is to put its entire UK operations up for sale has again thrown the crisis faced by the UK, and wider EU, steel sector into the media spotlight. The underlying factors that have contributed to the difficulties facing the global steel sector have been discussed at length; an overcapacity of steel production, a slump in global commodity prices and, a flooding of open markets with below-market price Chinese steel.
These factors form the basis of the difficulties the global steel sector is facing, but one must question why companies in the UK have been particularly disadvantaged when trying to weather the storm compared even to their European counterparts. There are a number of exacerbating factors at play in the UK’s business environment; for example high environmental costs and business rates, but it is perhaps uncompetitive energy costs, specifically electricity, that stands out most clearly, with steel companies continuing to highlight it as a major ongoing issue.1
Significant electricity price disparity with competitors in recent years has undermined the sector’s ability to operate competitively and, importantly, has diminished the UK’s attractiveness as a place for inward investment. What follows is an examination of the issues of energy and steel production and why electricity costs have become a competitive issue.
Here is a paper by UK Steel/EEF on energy costs and the steel sector by Richard Warren, EEF Senior Energy and Environment Policy Adviser.
Download the Energy Costs and the Steel Sector briefing.