Ineos, the privately held chemicals group controlled by Sir Jim Ratcliffe, said on Tuesday it would mothball all three of its acetyls chemical plants in Hull, northern England, citing surging energy costs that the company said make the facilities uncompetitive in global markets. Two of the plants have already ceased production, with the third due to come offline within days.

The Hull sites are world-scale chemical intermediate plants and are the last remaining acetyls facilities of their kind in Europe. The plants have 245 direct employees and support almost 4,000 wider supply chain jobs across Humberside. They produce chemicals used in medicines, clothing, cosmetics, detergents, building materials and explosives. The sites use gas both as a feedstock and as an energy source, burning hydrogen derived from gas to power chemical production.

Ratcliffe said Ineos was being forced to mothball some of the most efficient plants in Europe, with UK and European gas prices now running at roughly 12 times the level seen in the United States and eight times that of China [Source: Reuters]. UK front-month gas prices are trading around $23.51 per million British thermal units, compared with $2.84 per MMBtu for the US Henry Hub benchmark, according to data from the London Stock Exchange Group and Intercontinental Exchange [Source: LSEG/ICE data via Reuters]. The wholesale price of natural gas has almost doubled in the UK and Europe since July.

European manufacturers have struggled to compete with US and Chinese rivals since the energy crisis triggered by Russia's invasion of Ukraine, leaving energy-intensive industries with far higher fuel and power costs than competitors in those markets. The competitive pressure on the Hull sites is not new: Ineos cut 60 jobs at the complex last year, attributing the reductions to energy costs and to importers dumping product into UK and European markets.

Ineos is calling on the UK government to work with the European Commission to put in place anti-dumping measures to prevent cheap US and Chinese products from flooding the market at below cost. The company did not set out a timescale for moving to permanent closure of the Hull sites, which it has invested in upgrading in recent years.

Sources: Bloomberg, BBC Business, The Guardian, Hydrocarbon Engineering, Reuters, S&P Global Commodity Insights, Business Matters, LSEG, ICE