Industry group UK Steel has urged the Government to match the financial support offered to rival markets such as Germany during the energy crisis.
The trading body fears the UK’s steel sector risked falling further behind the German market without expanded and enhanced support with energy bills.
Currently, the Energy Bills Relief Scheme limits electricity and gas prices to £211 per megawatt hour and £75 per megawatt hour respectively over the six months from September to March next year.
The cost of the package has been estimated at over £20bn by Cornwall Insight, with the Government expected to announce more tapered, targeted support for businesses from April.
It is set to review the scheme this month, and announce plans for further support before the end of the year.
However, UK Steel argues expanding the scheme is essential to ensure energy intensive industries are not overwhelmed by spiralling wholesale costs.
It has called for the price limit to be reduced to £112 per megawatt hour for electricity in line with support packages announced by the German government for its rival steel industry.
Electricity prices have risen to over £1,500 per megawatt hour this week, over 30 times the historical average.
This has forced some steelmakers to cease production temporarily, according to the trade body.
Director General of UK Steel, Gareth Stace, said: “The steel sector is looking to the Government to announce that it will continue to cap electricity and gas prices for vulnerable sectors, such as steelmakers, when it publishes its review of the EBRS, expected before the end of the year. Critically the price cap must be updated to reflect new market conditions and actions being taken in competitor countries.”
“The Government must extend the support scheme, otherwise the UK steel sector will be wholly exposed to ravages of volatile energy markets with predictably grim consequences.”
When approached for comment, a Government spokesperson said: “We know this is a difficult time for factories and heavy industry, and we remain firmly on their side.
“That’s why we extended the Energy Intensive Industries Compensation Scheme by 3 years, and have acted to deliver the Energy Bill Relief Scheme, meaning businesses will pay less than half the predicted wholesale cost of energy this winter.|