London Daily

Focus on the big picture.
Thursday, Dec 04, 2025

UK industry could face shutdowns as wholesale gas price hits record high

UK industry could face shutdowns as wholesale gas price hits record high

Steel, chemicals and fertiliser industries warn of difficult winter unless government takes emergency action

Wholesale gas prices hit new all-time highs on Wednesday, prompting warnings that factories could be forced to shut down over winter or switch to more polluting fuels just as the UK hosts the Cop26 climate conference next month.

The crisis has already forced a wave of collapses among energy suppliers that has led to warnings of “desperate choices” for households likely to face higher bills as a result.

As power-hungry sectors such as steel, glass and chemicals fight their own battle with soaring gas and electricity costs, they warned of further shocks to both industry and consumers, including higher prices of goods and factories being forced to temporarily close.

Growing concern about the domino effect of high energy prices came as the cost of gas for delivery the next day reached 350p per therm on Wednesday, while gas for delivery in November reached 407p, both new records. Prices fell back later, after Russia’s president, Vladimir Putin, indicated that the country, the largest supplier of gas into Europe, was prepared to help ease the crisis.

But leading figures from energy-intensive industries said serious ramifications were already on the cards unless the government heeded their call for measures to reduce energy costs.

Trade body UK Steel said it was now “uneconomic” to make steel at certain times in the UK, with British firms facing double the electricity prices paid by rivals in Germany, France and the Netherlands. British Steel, based in Scunthorpe, has begun adding surcharges of up to £30 a tonne to its products to recoup higher energy costs, increasing costs for customers in the construction and automotive sectors.

David Bailey, a professor of business economics at Birmingham Business School, said consumers could end up feeling the pinch if steel remained expensive. “They’ll pass it on to consumers ultimately, so it could increase the price of cars,” he said.

Network Rail, which owns Britain’s 20,000 miles of railway and buys about 97% of its track from British Steel, said it had yet to see an increase in prices.

With just weeks to go until the UK hosts the Cop26 global climate conference, leaders in the glass and minerals industries said high gas prices could ultimately lead to increased pollution.

Richard Stansfield, the chief executive of the lime manufacturer Singleton Birch, said the increased cost of production was being passed on to consumers, including water companies and firms that use the mineral to turn waste into energy.

“We could get into a ridiculous situation where it’s cheaper to put waste into landfill than to put it into waste-to-energy plants,” he said. “There are all sorts of knock-on effects.”

Paul Pearcy, the federation coordinator at the trade body British Glass, said companies that make windows could be forced to revert to powering their furnaces with polluting fuels that had been abandoned.

“Some of our members still have heavy fuel oil on site, having moved over to gas,” he said. “Some of them are seriously considering moving back to that because of the price of gas.

“As prices go the way they are, it becomes more and more financially attractive but with Cop26 around the corner, it’s not a great advert.”

Glass companies and steelmakers run their furnaces continuously, making it extremely difficult, time-consuming and costly to shut down.

Jon Flitney, of the British Ceramic Confederation, said the same was true of its members’ kilns, meaning any decision to scale back operation would “not be taken lightly”.

However, he said that if prices remain high, “the balance between income and operating costs may shift”.

The glass, steel and minerals industries are all members of the Energy Intensive Users Group trade body, which warned of shutdowns in essential industries without help from the government and the energy regulator, Ofgem.

Richard Leese, the chairman of the group, said: “We have already seen the impact of the truly astronomical increases in energy costs on production in the fertiliser and steel sectors.

“Nobody wants to see a repeat in other industries this winter given that UK energy-intensive industries produce so many essential domestic and industrial products and are intrinsically linked with many supply chains.”

The group has called for exemptions for energy-intensive industries from measures designed to help fund renewable energy and penalise carbon emissions.

Any slowdown in work schedules could place a further drag on the economy, adding to concern in sectors such as construction, where shortages of materials and staff drove growth expectations to an eight-month low, according to survey figures released on Wednesday.

Spiking gas prices have already taken their toll on British business, forcing fertiliser plants to shut down and capsizing 12 energy suppliers. A 13th, Omni Energy, warned its customers on Wednesday that it could cease trading in November.

The energy adviser Cornwall Insights said it expected the effect to drive up household energy bills into 2023, by driving the government-imposed cap on energy prices higher.

It expects the energy price cap, currently set at £1,277 for an average dual fuel customer paying by direct debit, to reach £1,659 for summer 2022 and £1,663 for next winter.

The business department said: “We are determined to secure a competitive future for our energy-intensive industries and in recent years have provided them with extensive support, including more than £2bn to help with the costs of energy and to protect jobs.

“Our exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown renewable energy sector to further reduce our reliance on fossil fuels.”
Newsletter

Related Articles

0:00
0:00
Close
UK Inquiry Finds Putin ‘Morally Responsible’ for 2018 Novichok Death — London Imposes Broad Sanctions on GRU
India backs down on plan to mandate government “Sanchar Saathi” app on all smartphones
King Charles Welcomes German President Steinmeier to UK in First State Visit by Berlin in 27 Years
UK Plans Major Cutback to Jury Trials as Crown Court Backlog Nears 80,000
UK Government to Significantly Limit Jury Trials in England and Wales
U.S. and U.K. Seal Drug-Pricing Deal: Britain Agrees to Pay More, U.S. Lifts Tariffs
UK Postpones Decision Yet Again on China’s Proposed Mega-Embassy in London
Head of UK Budget Watchdog Resigns After Premature Leak of Reeves’ Budget Report
Car-sharing giant Zipcar to exit UK market by end of 2025
Reports of Widespread Drone Deployment Raise Privacy and Security Questions in the UK
UK Signals Security Concerns Over China While Pursuing Stronger Trade Links
Google warns of AI “irrationality” just as Gemini 3 launch rattles markets
Top Consultancies Freeze Starting Salaries as AI Threatens ‘Pyramid’ Model
Macron Says Washington Pressuring EU to Delay Enforcement of Digital-Regulation Probes Against Meta, TikTok and X
UK’s DragonFire Laser Downs High-Speed Drones as £316m Deal Speeds Naval Deployment
UK Chancellor Rejects Claims She Misled Public on Fiscal Outlook Ahead of Budget
Starmer Defends Autumn Budget as Finance Chief Faces Accusations of Misleading Public Finances
EU Firms Struggle with 3,000-Hour Paperwork Load — While Automakers Fear De Facto 2030 Petrol Car Ban
White House launches ‘Hall of Shame’ site to publicly condemn media outlets for alleged bias
UK Budget’s New EV Mileage Tax Undercuts Case for Plug-In Hybrids
UK Government Launches National Inquiry into ‘Grooming Gangs’ After US Warning and Rising Public Outcry
Taylor Swift Extends U.K. Chart Reign as ‘The Fate of Ophelia’ Hits Six Weeks at No. 1
250 Still Missing in the Massive Fire, 94 Killed. One Day After the Disaster: Survivor Rescued on the 16th Floor
Trump: National Guard Soldier Who Was Shot in Washington Has Died; Second Soldier Fighting for His Life
UK Chancellor Reeves Defends Tax Rises as Essential to Reduce Child Poverty and Stabilise Public Finances
No Evidence Found for Claim That UK Schools Are Shifting to Teaching American English
European Powers Urge Israel to Halt West Bank Settler Violence Amid Surge in Attacks
"I Would Have Given Her a Kidney": She Lent Bezos’s Ex-Wife $1,000 — and Received Millions in Return
European States Approve First-ever Military-Grade Surveillance Network via ESA
UK to Slash Key Pension Tax Perk, Targeting High Earners Under New Budget
UK Government Announces £150 Annual Cut to Household Energy Bills Through Levy Reforms
UK Court Hears Challenge to Ban on Palestine Action as Critics Decry Heavy-Handed Measures
Investors Rush Into UK Gilts and Sterling After Budget Eases Fiscal Concerns
UK to Raise Online Betting Taxes by £1.1 Billion Under New Budget — Firms Warn of Fallout
Lamine Yamal? The ‘Heir to Messi’ Lost to Barcelona — and the Kingdom Is in a Frenzy
Warner Music Group Drops Suit Against Suno, Launches Licensed AI-Music Deal
HP to Cut up to 6,000 Jobs Globally as It Ramps Up AI Integration
MediaWorld Sold iPad Air for €15 — Then Asked Customers to Return Them or Pay More
UK Prime Minister Sir Keir Starmer Promises ‘Full-Time’ Education for All Children as School Attendance Slips
UK Extends Sugar Tax to Sweetened Milkshakes and Lattes in 2028 Health Push
UK Government Backs £49 Billion Plan for Heathrow Third Runway and Expansion
UK Gambling Firms Report £1bn Surge in Annual Profits as Pressure Mounts for Higher Betting Taxes
UK Shares Advance Ahead of Budget as Financials and Consumer Staples Lead Gains
Domino’s UK CEO Andrew Rennie Steps Down Amid Strategic Reset
UK Economy Stalls as Reeves Faces First Budget Test
UK Economy’s Weak Start Adds Pressure on Prime Minister Starmer
UK Government Acknowledges Billionaire Exodus Amid Tax Rise Concerns
UK Budget 2025: Markets Brace as Chancellor Faces Fiscal Tightrope
UK Unveils Strategic Plan to Secure Critical Mineral Supply Chains
UK Taskforce Calls for Radical Reset of Nuclear Regulation to Cut Costs and Accelerate Build
×