The world’s largest chemical producer is permanently downsizing in Europe.
BASF cited rising energy prices in Europe as the reason.
Chief executive Martin Brudermüller added that “the European chemical market has been growing only weakly for about a decade.”
BASF has said it will have to downsize “permanently” in Europe, with high energy costs making the region increasingly uncompetitive.
“The European chemical market has been growing only weakly for about a decade [and] the significant increase in natural gas and power prices over the course of this year is putting pressure on chemical value chains,” chief executive Martin Brudermüller said on Wednesday.
BASF, which produces products from basic petrochemicals to fertilisers and glues, spent €2.2bn more on natural gas at its European sites in the first nine months of 2022, compared with the same period last year.
Brudermüller said the European gas crisis, coupled with stricter industry regulations in the EU, was forcing the company to cut costs in the region “as quickly as possible and also permanently”.
As they downsize in Europe, they are expanding in China.
They just opened up a €10 billion complex in China.
World’s biggest chemicals company says high energy costs make region increasingly uncompetitive
— Tracy (𝒞𝒽𝒾 ) (@chigrl) October 26, 2022
The cutbacks at home contrast with a 10 billion euro chemical complex that BASF plans to build in Zhanjiang, southern China, to run entirely on renewable energy, as it banks on booming Asian markets and looks to reduce reliance on Europe.
The move defies heightened concerns in the German government over economic dependence on a Chinese trade partner that it sees under increasingly authoritarian rule. The BASF CEO will join German Chancellor Olaf Scholz on a visit to China next week. “We have a very, very profitable China business. Half of the world market is there,” Brudermueller said on a media call. “What kind of a risk does a company run into if it renounces half of the market?”
Meanwhile, the left still pushes green energy across the world.