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British Steel today issued a stark warning over power prices “spiralling out of control” as the gas crisis swept across the UK economy.
The nation’s second-biggest steel producer said the colossal hikes — up 50-fold from £50 per megawatt-hour to £2500 per MWh since April — are making the power-hungry production process impossible at certain times.
“With winter approaching, when demand will rise, prices could get significantly worse,” the company said.
British Steel, owned by Chinese conglomerate Jingye, said it was maintaining production at “normal levels” for now but the spike in costs could not be “absorbed or ignored.”
It called on the Government and regulator Ofgem to suspend environmental levies which push UK power prices above those of European competitors.
Kwasi Kwarteng, the Business Secretary, did his best to soothe nerves. He accepted the next few days are going to be “quite challenging” but was confident price rises would be temporary.
Kwarteng reckons between five and eight upstart energy suppliers will go under, against industry forecasts that as many as 30 could hit the wall.
Scotching calls for bail-outs, he added: “The way that markets work is the badly-run companies often go out of business, that’s a natural process.”
Consolidation across the energy sector is expected to intensify as the bigger players mop up the fallen: British Gas owner Centrica has swallowed around 350,000 customers from four unhedged rivals pushed to the wall so far.
The knock-on effect is being felt most keenly in industries which rely on carbon dioxide. Meat producers fear they have just a few days of the gas — used to stun livestock — following temporary shutdowns at main producer CF Industries. Some 100,000 pigs earmarked for slaughter are backing up on farms.
Fizzy drinks and frozen food firms are also on the brink. Kwarteng signalled that the Treasury could step in to prop up CFI through the crisis.
Adding to the pressure, the National Grid said a key under-sea cable knocked out last week in a fire at a convertor station in Kent will not come back online for another month. That will halve the capacity of the IFA line from France until late October.
The Food and Drink Federation said consumers will notice products missing from supermarket shelves “in about 10 days” without a resolution.