Community Union has written to UK prime minister Rishi Sunak urging him to "back Britain's steel industry".
In the letter obtained by Argus, Roy Rickhuss, general secretary of Community, told Sunak the UK industry "cannot succeed" if it continues to pay twice as much for energy as EU competitors and that decarbonisation would be impossible without a partnership with government.
In February last year, manufacturers association UK Steel published a report saying UK mills were paying an average of £47/MWh for electricity in 2020/21, compared to £25/MWh in Germany and £28/MWh in France. Achieving parity with Germany would save mills £54mn/yr that could be invested, the report said.
The UK steel industry is at a pivotal moment, not helped by this structural inability to compete. Having been told to be cash-positive, or at least cash-neutral, by its Indian parent, Tata Steel UK is seeking government help to decarbonise its operations — initially the producer would install at least one electric arc furnace, before adopting other technologies to meet its carbon targets, sources close to the company have told Argus.
Tata's talks with the government have been ongoing since Covid-19, but no resolution has been reached. Rickhusss said government inaction would "condemn Britain to being the only major economy that can't make its own metal". The UK has the smallest steel industry in the G7.
Despite its high cost base, Tata has been selling slab into Turkey at around $520/t cfr of late amid low coil demand, effectively competing with sanctioned and non-sanctioned Russian entities that have some of the lowest costs in the world. It has been a key steel seller into Turkey of late, sources suggest.
Argus' weekly UK hot-rolled coil assessment fell from a record high of £1,200/t in March to £610/t on 24 November. Importers from Asia with lower power prices, and no carbon costs, are offering material at around £560/t ddp.
Chinese-owned British Steel, which supplies more than 90pc of the steel for Network Rail, has requested government assistance to keep its blast furnaces running, amounting to around £500mn, according to sources. The company's owner, Jingye, said it cannot continue to operate the furnaces without the assistance.
It is not clear if aid will be forthcoming, as the Conservative government has hardened its stance on China.
