Steel firms have urged the Tories to throw the industry a lifeline as it battles rocketing energy prices.
Trade body UK Steel called on ministers to extend support to the sector after electricity costs soared above £1,500/MWh this week - more than 30 times the historical average.
Some plants have temporarily halted production until prices fall.
The current Energy Bill Relief Scheme is due to end in March, but industry insiders want it to run on longer.
UK Steel director-general Gareth Stace said: “Massive electricity price spikes this week have all but broken the Energy Bill Relief Scheme, which aims to shield industry from sustained, unsustainable price levels.
“Electricity prices are at 30 times their historical average this week, forcing some steel companies to cease production at key times during the day.
“This is simply not sustainable for the steel sector.”
He called for a “bridging solution” until a long-term plan is thrashed out.
Mr Stace added: “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. “
He said the German government is planning a scheme for all of 2023, where it will guarantee wholesale electricity prices at €130/MWh - well below the UK’s cap of £211/MWh.
“The UK Government should match this to ensure our industry’s ability to compete,” said Mr Stace.
“Without the continuation of the EBRS, our estimates show electricity prices being double those of German industry’s next year, leading to reduced production, shrinking market share and increased imports.
“Prolonged and frequent halts to production could become the norm, negatively impacting productivity, and leading to a decline in steel production in the UK.
“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.”
A Government spokesman 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 three 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.
“We remain committed to delivering a more affordable, secure energy system that is fit for the future through our landmark Energy Security Bill.”
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