UK steel industry association UK Steel has expressed disappointment over the government's latest budget, stating that it failed to introduce measures to address the persistently high electricity costs faced by British steelmakers.
Accordingly, UK steel producers currently face electricity prices 49 percent higher than those paid by their competitors in France, resulting in an additional £66 million in costs for the industry this year. UK Steel emphasized that high electricity costs remain a major challenge for British steelmakers, particularly as the industry moves toward electric arc furnace (EAF)-based production and other lower-carbon steelmaking technologies that require greater electricity consumption.
UK Steel stated that it had proposed a wholesale electricity price rebalancing mechanism, independently modeled by consultancy Baringa, which could bring industrial electricity prices closer to those paid by European competitors. The proposed mechanism would have an estimated net cost of approximately £50 million annually between 2026 and 2030.
Rising wholesale energy prices increase pressure on British steelmakers
UK Steel also highlighted the recent increase in wholesale energy prices amid continued instability in the Middle East, noting that prices have risen to approximately three times their February levels. According to the association, this development has further exposed British manufacturers to volatility in international gas markets.
Peter Brennan, director general of UK Steel, stated that the government's failure to address industrial electricity prices represents a missed opportunity to improve the competitiveness of British steelmaking and support investment in cleaner production technologies. He emphasized that the additional electricity costs faced by UK steelmakers could otherwise be directed toward new equipment, skilled employment and industrial decarbonization.
UK Steel has called on the government to reconsider the proposed electricity price rebalancing mechanism and work with the industry to establish more competitive electricity prices, supporting domestic steel production, investment and the transition toward lower-carbon steelmaking.
