BASF pushes petrochemicals growth in emerging markets

German-headquartered BASF is the world's largest chemical company. The group has been affected by stagnation in Europe but relies, like the rest of the German economy, on export-led growth. Rainer Diercks, president of the Petrochemicals division, explains the rationale behind the division's strategy.

Which geographies and product groups are the most promising and how is BASF's petrochemicals division evolving to take advantage of this?

Within the "We create chemistry" strategy BASF has set itself ambitious goals with sustainability and innovation being two main growth drivers. What we want to do as a company is summarized in the corporate purpose: "We create chemistry for a sustainable future." Our strategy aims to focus more strongly on customer industries than in the past and - with regard to regions - more focus will be on business expansions in emerging markets.

The Petrochemicals division of BASF is playing an important role within this strategy as petrochemicals are at the very heart of the BASF Verbund [integrated site philosophy] as a starting point for most of BASF's value chains. The full integration of production starting from steam crackers all the way to products for home and personal care or the electronic industry is of big value to BASF, ­because this enables a reliable and cost-efficient supply of base chemicals for the value-added products.

Development of new and innovative processes, improvement of our existing technologies and operational excellence will continue to play a major role for Petrochemicals.

Our strategy for Petrochemicals is to further expand our market position - in particular in emerging markets. Therefore we have decided to invest in world-scale capacities in different regions in the next few years [see table]. Examples are the expansion of our Verbund site in Nanjing, China, and the construction of an acrylic acid complex in Brazil.

Apart from your strong focus on expansion in emerging markets, will Europe or the US see any new project action in petrochemicals?

Based on a strong increase in demand across all regions as well as the continued growth of demand for alternative plasticizers, we will double the production capacity of our ­non-phthalate plasticizer Hexamoll® DINCH from 100,000 tonnes/year to 200,000 tonnes/year. A second production plant in Ludwigshafen is under construction with startup in 2013. This is the second capacity increase for Hexamoll® DINCH since its successful market launch in 2002. In 2007, the original ­production capacity of 25,000 metric tons per year was quadrupled to 100,000 metric tons per year.

Besides investments in products and capacities, another important issue is the infrastructure. To be competitive, it is essential to have excellent infrastructure. That is why BASF is participating in several pipeline projects in Europe such as the EPS pipeline for ethylene, which will connect Ludwigshafen with the Bavarian chemical industry around Münchsmünster. This pipeline is planned to be inaugurated within 2012 and will strengthen supply security as well as production flexibility at our site in Ludwigshafen, Germany.

In North America, we initiated a number of measures at our BFLP [BASF FINA Limited Partnership] joint venture in Port Arthur in order to improve the feedstock flexibility of the cracker. These measures include, for instance, the construction of an additional furnace to be added to the existing steam cracker. This will increase production capacity and will enable the Port Arthur site to maintain its competitive position within the petrochemicals industry.

What is your market outlook for 2012 including any challenges?

Overall, the Petrochemical markets are expected to grow faster than GDP in 2012. Key drivers for this growth are the emerging markets in South America and especially in Asia - with China and India as the main growth drivers. In Europe and the US, markets will show only a moderate growth. The development of the crude oil and naphtha prices constitutes the most important uncertainty for the petrochemical markets 2012 with respect to volume, growth and margin development.