UK steel sector hit by electricity costs and Brexit

British steelmakers pay twice as much for electricity as their French competitors and 50 percent more than their German competitors, according to an industry report. The pressure on the sector is mounting as the UK prepares to leave the European Union.

A report produced by the UK Steel industry group shows that electricity price disparities between the UK and the EU are widening for the third consecutive year, disrupting energy-intensive sectors such as metallurgy.

The state is heading towards its impending exit from the EU on March 29, which could have a big impact on UK production if it leads to wide customs delays, new tariffs and other trade barriers with the UK's largest trading partner.

“The price differential continues to weaken the industry's ability to attract international investment - instead, investments will be made in more favorable markets,” said UK-based Steel CEO Gareth Stace.

"It is time for the government to ensure the future viability of the UK steel sector."

The industry report shows that the government's review of industrial strategy and energy costs, launched a year ago, has yet to protect vulnerable industries from the consequences of an impending EU exit from the EU.

Steel, the second most used material in the world, is often outside the UK's political agenda because it is seen as a strategic industry critical to growth. The metal is also used to make military weapons.

The steel industry in the UK is gradually recovering from the crisis that resulted in the loss of 7,000 steelmaking jobs, about a quarter of the workforce, between September 2015 and May 2017.

Some analysts believe Tata Steel UK, the UK's largest steel mill, is vulnerable to cuts due to poor earnings as its Indian parent prepares to complete its merger with German steelmaker Thyssenkrupp next year.