UK Steel industry may face shutdowns as wholesale gas price hits record high.
Wholesale gas prices hit new all-time highs on Wednesday, prompting warnings that factories may have to close for the winter or switch to more polluting fuels as the UK hosts the Cop26 climate conference next month.
The crisis has already forced a wave of slump among energy suppliers, leading to warnings of "desperate choices" for households likely to face higher bills as a result.
As energy-hungry sectors like steel, glass and chemicals fight their own wars with rising gas and electricity costs, they have warned of more shocks for both industry and consumers, including higher commodity prices and forced factories to close temporarily.
Growing concern about the domino effect of higher energy prices came as the cost of gas for next-day delivery hit 350p per thermal on Wednesday and gas for delivery in November hit 407p, both new records. Prices fell after Russian President Vladimir Putin said the country, Europe's largest gas supplier, was ready to mitigate the crisis.
But leading figures in energy-intensive industries said serious consequences are emerging unless the government heeds calls for action to cut energy costs.
The UK Steel trade body said it was "uneconomical" to produce steel in the UK at certain times, as British firms faced twice the electricity prices paid by their competitors in Germany, France and the Netherlands. Scunthorpe-based British Steel has begun adding surcharges of up to £30 per ton to its products to offset higher energy costs and increase costs for customers in the construction and automotive industries.
David Bailey, professor of business economics at Birmingham Business School, said consumers may eventually feel distressed if steel remains expensive. “Eventually they will pass it on to consumers so it can increase the price of cars,” he said.
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