BASF to Boost Presence in Asia, Focus on China

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Researched by Industrial Info Resources (Sugar Land, Texas)--BASF SE (OTC:BASFY) (Ludwigshafen, Germany), the largest chemical company in the world, is planning to direct at least 20% of its chemical sales toward Asia in the near future. China is expected to account for most, due to its projected growth, particularly in the areas of automobile manufacturing and construction.

In 2007, Chongqing Chemical and Pharmaceutical Holding (Chongqing, China) signed a memorandum of understanding with officials of Chongqing Direct Controlled Municipality in China to build a multibillion-dollar chemical industry park, and BASF is planning to build there to boost chemical production in Asia.

A major part of the Chongqing chemical park will be devoted to a massive methylene diphenylene isocyanate (MDI) production facility, which will be devoted to the production of polyurethanes. A memorandum of understanding between Chongqing Chemical and Pharmaceutical Holding and BASF was signed in June 2008, but the $1 billion plant has been repeatedly delayed due to unfavorable conditions brought about by the economic slowdown and a decrease in demand for polyurethanes. BASF has several MDI-based products, including Elastan, an adhesive used for applications such as automotive manufacturing, footwear, and sports flooring.

The MDI production facility is expecting approval by the end of the year, and BASF has high hopes for construction commencing by mid-2011. Construction is scheduled to be completed by 2013, but operations are not expected to begin until 2014. BASF's Chongqing site will be the world's largest MDI production train in operation, with an annual capacity of 400,000 metric tons. China's appetite for specialty and general chemicals has become the primary driving force in Asia's chemical market, and MDI growth alone is projected to be 9% per year.

BASF is also seeking to bolster its foothold in Malaysia. The company operates a joint venture company with Petroliam Nasional Berhad (Petronas) (Kuala Lumpur, Malaysia) dedicated to butanediol and similar products, but BASF and Petronas are planning to create a new joint venture catering to the production of acids, surfactants, and C-4 based products. Between the new Malaysia and China sites, BASF will have a stronger presence in Asia ahead of other European companies.

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