Energy and transport costs blamed for new steel price hike

Aaron Morby 1 year ago

British Steel has blamed soaring energy and transport costs for a fresh £30 a tonne hike in structural steel from today.

The producer said it was imposing a new temporary steel price surcharge because it could no longer absorb rising energy and haulier costs in the UK.

It is the first major industry supplier to respond with a new round of price hikes in the face of the present gas price and transport crisis.

In a statement to customers this week, it said: “As you will no doubt be aware from the impact on your own business and reports in the news, the costs of energy and transport continue to increase significantly.

“We have so far absorbed these cost increases within our normal price rises, but with the continued escalation in both costs we have reluctantly taken the decision British Steel can no longer absorb these costs in our current prices.”

Of the total temporary increase around £25/t is down to energy inflation and £5/t to HGV salary inflation and haulier prices.

The steel giant said that on average, wholesale electricity prices were up 300% and natural gas prices almost 400% since the end of 2020.

“These major increases have increased exponentially during August and September and the forward prices indicate very high costs will continue through the winter period and may increase further. Regrettably, we now have no choice but to apply a temporary surcharge to recover a part of our actual cost increases.”

On the transport squeeze it told customers: “We have experienced significant service failures and the availability of transport has deteriorated since the summer, despite the price increases we have paid already.

“To date we have absorbed these increases in full since February 2021 and we continue to work closely with our subcontractors to optimise road transport deliveries and to find alternative transport modes where possible.

“While increased transport costs and a lack of availability are impacting all sectors across the UK and Europe, please be assured we continue to monitor the situation very closely and make every effort to minimise disruption to our customers.”

On raw material costs, British Steel said it had seen some relief in iron ore prices over the past two months, but this has been more than offset by rising coking coal prices, which have reached an all-time high price.

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