Home / Business and Economy / BASF Opens China Plant Amid Market Gloom
BASF Opens China Plant Amid Market Gloom
26 Mar
Summary
- BASF inaugurates its €10 billion Chinese petrochemicals facility.
- The new Zhanjiang plant faces a market with excess supply.
- Middle East conflict disrupts raw material flows for Asian petrochemicals.
BASF SE inaugurated its significant €10 billion ($11.6 billion) petrochemicals facility in Zhanjiang, China, on Thursday. This expansion occurs amidst a troubled market grappling with oversupply and Middle East conflict-driven disruptions. The Zhanjiang Verbund site in Guangdong province represents BASF's largest investment to date. Prospects for the European chemicals sector remain grim, with analysts noting BASF is adding supply to an already saturated market.
CEO Markus Kamieth is restructuring the company, having recently divested its coatings business. While the Zhanjiang facility is strategically vital long-term, near-term market conditions are worse than anticipated. The site is projected to have a slightly negative earnings contribution in 2026 due to startup costs, with positive earnings expected from 2027 onwards.
The conflict in the Middle East is creating a divide among Asian producers based on their feedstock models. Companies relying on domestic coal or US/Chinese ethane are less exposed than those dependent on Middle Eastern crude. BASF's new cracker is designed for feedstock flexibility, including naphtha and butane, positioning it better to navigate disruptions compared to older, naphtha-reliant plants.
