Ineos halts three Hull plants over 12x US gas prices
Sir Jim Ratcliffe has mothballed Ineos Acetyls' Humberside site, affecting up to 1,000 staff. UK wholesale gas has almost doubled since July, and the bill lands on anyone running energy-hungry operations here.
Ineos is pausing production at its three plants in Hull. Two have already been switched off and the third follows in the coming days.
The company says natural gas in the UK costs twelve times what it costs in the United States, and eight times the cost of the coal-based processes used by Chinese competitors.
Sir Jim Ratcliffe, who owns the group, said the plants could not compete on those numbers. He called the government's energy policy "economic vandalism on an industrial scale".
The shutdown affects up to 1,000 staff, of whom 245 work directly at the site. The BBC understands workers will be kept on while the company tries to buy liquefied natural gas directly from the US, a process that could take up to a year, or waits for prices to fall.
The three plants make acetic acid, used in vinegar, paint and glue; acetic anhydride, a key ingredient of aspirin; and ethyl acetate, a solvent also used to decaffeinate tea and coffee. Ineos Acetyls is the only European producer of these chemicals.
The trigger is not company-specific. Disruption to oil and gas through the Strait of Hormuz, following the US-Israel war in Iran, has pushed prices up worldwide.
Wholesale natural gas in the UK and Europe has almost doubled since July. That is the same input that generates the electricity behind every server rack, cold store and production line in the country.
Ineos is asking the UK and EU governments for tariff protection against Chinese products. Most of its output is exported to the EU.
The Department for Business, Innovation, Science and Trade said it was a concerning time for workers at Saltend and their families. It pointed to £350m for strategically important chemicals producers, available on a co-investment basis, trade measures on foreign chemicals imports, and the Supercharger and British Industrial Competitiveness Scheme.
This is not the first cut at the site. Ineos Acetyls shed a fifth of its workforce last year, citing energy costs and cheap Chinese competition, and asked for tariffs then too.
Ratcliffe has been publicly critical of the UK for more than a week. He told BBC News that he had lost confidence in the country, which he described as on the slide, blaming high taxes and immigration. He has been a tax resident in Monaco since 2020.
For a founder, the useful detail is the timeline rather than the politics. A company of Ineos's size expects to need up to a year to arrange cheaper imported gas, which is a year of paying the spot price in the meantime.
If your unit economics assume UK energy at July levels, they are out of date. The support schemes named by the department are aimed at chemicals producers and industrial electricity users, and the co-investment money requires you to put in capital of your own.
Anyone signing a multi-year lease on UK manufacturing space, or committing to self-hosted compute here, is now taking a position on gas prices whether they intended to or not.