Ineos Mothballs Hull Chemical Plants as UK Gas Prices Hit 12 Times US Levels

Ineos, the industrial group controlled by billionaire Sir Jim Ratcliffe, is suspending production at its three chemicals plants in Hull because UK gas prices now run twelve times higher than US levels and eight times higher than the coal-based processes used by Chinese competitors.

Two plants at the Saltend site have already been shut down. The third will follow within days, the company said.

"We are being forced to mothball some of the most efficient plants in Europe, but with gas prices now 12 times the level in the US and 8 times that of China, we just cannot compete," Sir Jim said in a statement.

The shutdown affects up to 1,000 Ineos staff, of whom 245 work directly at the site, according to the company. The BBC understands workers will be kept on while Ineos attempts to buy liquefied natural gas directly from the US at lower prices — a process that could take up to a year — or waits for gas prices to fall.

Strategic assets going dark

Ineos Acetyls, the Ineos Group unit that operates the Hull site, is the only European producer of several key chemicals. Gas is a core ingredient in its production processes.

The three plants make distinct products. One produces acetic acid, used in vinegar, paint and glue. A second makes acetic anhydride, a key ingredient of aspirin. The third produces ethyl acetate, a solvent also used to decaffeinate tea and coffee.

Ineos says its East Yorkshire plants rank "among the most efficient in the world," producing materials with half the carbon footprint of US rivals and one eighth the footprint of Chinese equivalents.

The company is pressing the UK government and the EU — where most of its output is exported — to impose tariff protections against Chinese products.

The price shock behind the decision

Wholesale natural gas prices have almost doubled in the UK and Europe since July. The disruption of oil and gas supplies through the Strait of Hormuz, following the US-Israel war in Iran, has pushed prices up worldwide.

Sir Jim did not limit his criticism to market conditions. He called the current government's energy policy "economic vandalism on an industrial scale."

It is the second time in less than a week that Ratcliffe — who also owns a large stake in Manchester United — has attacked government policy. He told BBC News last week he had lost confidence in the UK, describing the country as "on the slide" and blaming high taxes and high immigration. His wealth is estimated at around £15bn. A Brexit supporter, he has been a tax resident in Monaco since 2020.

Government response

The Department for Business, Innovation, Science and Trade acknowledged it would be a "concerning time for workers in Saltend and their families."

"We've taken bold action to support our chemicals industry including £350 million for strategically important chemicals producers, which will be available on a co-investment basis," a spokesperson said. "We've also put trade measures in place on foreign chemicals imports and are tackling high electricity costs via our Supercharger and British Industrial Competitiveness Scheme to keep our chemicals sector competitive."

A repeat warning

This is not Ineos Acetyls' first contraction. The company cut a fifth of its workforce last year, citing high energy costs and "dirt-cheap" competition from China, and called for tariffs on imports to protect the industry.

The mothballing of Europe's only producer of these acetyls chemicals leaves European supply chains for pharmaceuticals, food production and industrial solvents dependent on imports unless Ineos secures cheaper US LNG or governments move on tariff protection.