23rd September 2026
Britain's energy costs have claimed another major industrial casualty, with chemicals giant INEOS announcing that it is suspending operations at three plants at its Saltend site near Hull.
The decision affects facilities producing acetic acid, acetic anhydride and ethyl acetate. These may not be chemicals that most people have heard of, but they are important building blocks for a remarkably wide range of everyday products, including medicines, clothing, cosmetics, detergents, paints, adhesives and construction materials. Acetic anhydride is also used in the production of medicines such as aspirin and paracetamol.
The plants directly employ around 240 to 300 people, depending on how the workforce is counted, but the wider operation supports nearly 4,000 jobs in the Humberside economy and supply chain. That is why the announcement has caused concern well beyond the factory gates.
INEOS says this is a mothballing rather than an outright permanent closure. Two of the three plants have already stopped production and the third is expected to come offline within days.
The company has blamed the decision primarily on the cost of natural gas in Europe.
Sir Jim Ratcliffe, INEOS chairman, said the company was being forced to mothball plants that had received substantial investment and were among the most efficient in Europe because it could no longer compete with producers elsewhere in the world.
INEOS says European gas is currently around 12 times more expensive than gas in the United States and around eight times the cost of the energy used for comparable production in China. Reuters put the current British front-month gas price at about $23.51 per million British thermal units, compared with around $2.84 in the United States.
There is an important wider point here.
Gas is not simply something that heats a chemical plant. In parts of the chemical industry it is also an essential feedstock, meaning that expensive gas directly affects the cost of making the product.
That leaves European manufacturers competing with businesses in countries where energy can be substantially cheaper.
A £30 million investment
The Hull plants were not neglected old factories that had simply been allowed to run down.
INEOS completed a £30 million investment at the site in 2025 to convert the plants to hydrogen fuel. The company says this reduced their carbon emissions by around 75%.
Yet that investment has not solved the fundamental problem of production costs.
The company has also been facing competition from cheaper imports, particularly from China, together with weaker demand and additional chemical production capacity coming on stream in Asia. The Financial Times reported that INEOS had already cut 60 jobs at Hull last year because of high energy costs and competition from Chinese imports.
This makes the latest announcement more significant than a temporary response to one particularly expensive gas bill.
It raises questions about whether some forms of manufacturing can remain commercially viable in Britain when the finished products can be imported from countries with much lower production costs.
There is also an environmental paradox.
INEOS argues that allowing European production to disappear does not necessarily mean that the chemicals stop being made. They can instead be produced elsewhere and transported to European customers.
The company says the carbon footprint of its Hull products is substantially lower than equivalent material produced in the United States or China.
That creates an uncomfortable question for policymakers.
If Europe makes it increasingly expensive to manufacture energy-intensive products at home, does it reduce emissions globally, or does it simply move some of the production and associated emissions somewhere else?
The Government's response
The UK Government has pointed to measures intended to help energy-intensive manufacturers.
It says it has introduced £350 million of support measures and electricity discount schemes for energy-intensive industries, with the measures expected to provide up to £400 million a year in relief.
The Government has also acknowledged the uncertainty facing jobs at Saltend.
But the INEOS decision demonstrates the difficulty of the problem.
Government support can reduce some costs, but it cannot completely remove the underlying difference between British and American or Chinese energy prices.
And this is not an isolated problem for INEOS.
Britain has already seen serious pressure on energy-intensive industries including steel, chemicals, fertiliser and other manufacturing operations. The issue is particularly important because these industries sit at the beginning of long supply chains.
A factory making a relatively obscure chemical may ultimately be supplying a pharmaceutical company, clothing manufacturer, construction business or other British manufacturer.
Once that production disappears, rebuilding the capability can be considerably harder than keeping it going in the first place.
warning that reaches Scotland
For Scotland, the Hull announcement has an additional resonance.
INEOS has already been involved in the debate over the future of industrial production at Grangemouth. The UK Government agreed a package worth more than £120 million to help secure the future of the strategically important ethylene cracker there, alongside at least £30 million of INEOS investment.
The two situations are not identical, but they illustrate the same underlying problem.
Britain wants to maintain a manufacturing base while also reducing carbon emissions. At the same time, British industry has to compete in international markets where energy costs and regulatory conditions can be very different.
The Hull plants show what can happen when those pressures become too great.
The immediate impact is measured in hundreds of direct jobs and thousands more supported through the local economy.
The longer-term question is whether Britain can afford to lose industrial capacity one plant at a time and then become increasingly dependent on imports for the chemicals and materials needed by its own manufacturers.
For the workers at Saltend, the hope will be that mothballed means temporary.
For British industry more generally, the bigger question is whether the economics of manufacturing in this country can be made competitive enough to bring those plants back into production.