Factories face temporary closures within weeks over energy costs, industry warns

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Steel, ceramic and chemical factories could be forced to close temporarily within weeks due to rising electricity and gas prices, the government warned today.

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Industry leaders in these energy-intensive sectors will meet with Business Secretary Quasi Quarteng on Friday afternoon. They plan to set energy prices for electricity and natural gas with a serious impact on their operations, Granthshala understands.

A group of energy-intensive industry bodies is set to determine how even the largest companies with strong balance sheets are facing penal costs for lowering their energy prices in the coming months. It’s no longer a matter of some weak businesses, two industry insiders told GranthshalaMany big firms are also under heavy pressure due to sharp price hike.

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The impact of continued high energy costs is so severe that many companies are temporarily shutting down operations in the coming weeks and months. The hedging cost of electricity at the beginning of next year is in some cases more than five times the average of the previous year.

Meanwhile, a major interconnector with France is still out of action, with many industry groups believing the risk of a sharp rise in electricity costs the next day rises. Even companies that buy contracts to hedge against energy surges ahead of time cannot completely avoid the next day’s prices. This practice, also known as ‘hedging’, cannot protect against long-term increases in energy costs.

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Many UK manufacturers are facing an “all round crunch” amid high raw material costs, labor shortages in key logistics industries and high shipping charges, according to a leader who is set to attend the meeting on Friday. Huh.

Shortly after a fire in September that hit the interconnector, prices soared to record highs and some factories closed temporarily instead of paying the exorbitant cost. According to the National Grid’s winter outlook for electricity, the energy link is not expected to be fully operational until March next year, raising the risk of blackouts.

According to industry sources, Mr Quarteng, who is due to speak with business leaders over a video call this afternoon, is not expected to offer a quick solution to the problem. A government source close to the talks said the trade department is “monitoring the impact of higher energy prices on companies on a daily basis” and was keen to “gather more intelligence” from business groups today.

He said the government has already taken several steps to try and mitigate the impact of higher prices on manufacturing and other sectors. This includes reduction in gas transmission fees for companies.

However, energy intensive industries will try to build on the same level of support for Britain as in other EU countries such as Italy and France, which they argue are more liberal.

The Portuguese government has slashed network fees for companies, Italy has cut renewable levies on energy bills, and France has taken the relatively drastic step of offering guaranteed prices for bulk energy to industry.

UK Steel’s Gareth Stace told BBC Radio 4S world at one: “The prime minister is calling for a high-wage economy this week. The steel sector already does exactly that – we pay our workers 45 percent more wages in areas where there is steel, they are also highly skilled.

“If you’re paying as much for gas and electricity as we’re paying for a steel sector, these unprecedented price increases are hurting us today.

“If the prime minister and the government don’t do something to help us, they could start throttling steel production here in the UK and instead of working towards a high-wage economy, we’re actually a low-wage economy.” Let’s walk with our eyes closed.”

Mr Stace said: “At the moment, there is an energy crisis. If the government doesn’t do anything, tomorrow there will be a steel crisis

“What impact this could have on jobs would be good not only for the steel sector and the sectors that have steel but for the UK economy as a whole.”

In the immediate aftermath of the September fires in energy prices that hit the interconnector, prices hit record highs and some factories closed temporarily instead of paying the exorbitant cost. According to the National Grid’s winter outlook for electricity, the energy link is not expected to be fully operational until March next year, raising the risk of blackouts.

However, any shutdown is extremely costly for some industries, and can damage equipment and production processes that cost millions of pounds. The cost of recovery can be very high for some.

According to industry sources, Mr Quarteng, who is due to speak with business leaders over a video call this afternoon, is not expected to offer a quick solution to the problem.

A government source close to the talks said the trade department is “monitoring the impact of higher energy prices on companies on a daily basis” and was keen to “gather more intelligence” from business groups today.

He said the government has already taken several steps to try and mitigate the impact of higher prices on manufacturing and other sectors. This includes reduction in gas transmission fees for companies.

However, energy intensive industries will try to build on the same level of support for Britain as in other EU countries such as Italy and France, which they argue are more liberal.

The Portuguese government has slashed network fees for companies, Italy has cut renewable levies on energy bills, and France has taken the relatively drastic step of offering guaranteed prices for bulk energy to industry.

Mr Stais said Mr Quarteng “needs to take immediate action before reviewing spending to address the price disparity between the UK steel sector and the steel sector in Germany”.

He said: “We pay 50 to 80 percent more for our electricity than our direct competitors in Germany.

“There are a number of ways that the government today, this week, can change that and put us…

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Credit: www.independent.co.uk /

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