BASF to Close Polyamide 6 Plant at Rudolstadt

LONDON (ICIS news)--BASF is to discontinue production of polyamide 6 (PA6) at its Rudolstadt site in east Germany at the end of 2010, the chemical company said on Tuesday.

It also plans to reduce PA6 capacity at its Ludwigshafen plant and will eliminate a total of 77 jobs from the two facilities, the company said in a statement.

A BASF spokeswoman said that by taking these steps the company would be reducing its PA6 capacity in Europe by 40,000 tonnes/year. It currently has a capacity of 410,000 tonnes/year in Europe.

The decision to restructure was prompted by BASF wanting to remain competitive in the polyamide market. The company was therefore focusing on its backward integrated plants, she added.

BASF’s Performance Polymers division head, Harald Lauke, said in a statement: “By focusing on the large, backward-integrated Verbund sites, we are improving our cost basis and safeguarding our competitiveness in the European polyamide 6 market.”

BASF will continue to operate a compounding plant for the production of engineering plastics in Rudolstadt.

A major PA6 buyer said the reduction in capacity would not be felt because of the number of players in the market.

“Taking 40,000 tonnes out of the market is not going to have much impact,” he added.

A European producer said that the timeframe set for the closure meant it would not shift the market dramatically.

PA6 producers have suffered from severely reduced margins this year as they failed to pass on higher feedstock costs to customers earlier in the year.

Since the beginning of 2009 contract prices for PA6 feedstock caprolactam have risen by €507-522/tonne as a result of benzene price increases. During the same period, prices for PA6 increased by just €100-150/tonne.

quoted from: ICIS.com

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BASF Shares Slump 4% on Weak Q2, no Recovery Seen for H2

LONDON (ICIS news)--BASF’s share price fell over 4% on Thursday after the German chemicals giant reported weak second-quarter results and warned of further possible setbacks.

The company’s second-quarter net profits dropped 74% year on year to €343m ($483m) as it continued to be hit by the global economic crisis. 

Sales were down 23% at €12.5bn, while earnings before interest and tax (EBIT) before special items were 53% lower at €1.1bn, BASF said. 

The company said its chemicals sales were down 30% in the quarter. 

Capacity utilisation rose from below 60% in the first quarter to slightly above 60% in the second – much lower that the pre-recession average of around 80%.

BASF said the downturn seemed to have bottomed out but it warned of further possible setbacks.

Group CFO Kurt Bock said there was no reason why the second half would show an improvement on the first, and could possibly be worse.

Oil & Gas and Agricultural Solutions were seasonally stronger in the first six months, while raw material prices for much of the business would increase in line with crude oil, squeezing margins.

BASF's hardest-hit businesses in the second quarter continued to be chemicals, plastics and functional solutions, largely because of their exposure to the depressed automotive and construction industries, BASF said.

Yet sales in the oil and gas business were down in the quarter on lower gas volumes and the lower oil price, BASF said.

BASF said its agriculture business posted higher sales and earnings.

“Overall, we think that the downturn seems to have bottomed out and there seems to be stabilisation at a low level,” CFO Kurt Bock said. 

“The trough appears to have been reached in North America, and China is again growing faster. But we see no signs of a sustained upturn. 

“There is still the danger of another painful setback due to overcapacities, bankruptcies and growing unemployment,” he added.

BASF had revised its full-year forecast given the still-depressed economic conditions worldwide and based on a decline in chemicals production of 8% and an average oil price of $55/bbl, among other factors, Bock said.

The company said it would take until the end of the 2009 before the global chemicals industry reaches the levels of 2005.

In view of the economic environment and the expenses resulting from the Ciba integration, BASF said it expects a significant decline in sales and earnings in 2009. 

“We are therefore unlikely to achieve our goal of earning our cost of capital in 2009,” Bock said.

At 11:32 CET, BASF shares were trading at €33.30, down 4.3% on Wednesday's close.

quoted from: ICIS.com

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BASF Specifies Restructuring Plans

Ludwigshafen , Germany – July 6, 2009 – BASF has finalized its plans for the integration of Ciba Holding AG, which it acquired in April 2009. Under the plans, former Ciba businesses are to be integrated into the operating divisions in BASF’s Performance Products segment where their potential can best be realized and developed. The integration will involve extensive restructuring measures that BASF expects to generate synergies of at least €400 million per year from 2012 onward. By the end of 2010, savings of approximately €300 million are to be achieved. At the same time, the integration process is expected to entail cash costs totaling approximately €550 million, about €150 million thereof in 2009. BASF will report details of non-cash integration costs as part of its second-quarter interim reporting on July 30, 2009.

 

The restructuring plans include a reduction of approximately 3,700 positions by 2013, the majority of which will be eliminated by the end of 2010. BASF is reviewing strategic options – including restructuring, sale or closure – for 23 of the 55 former Ciba production sites worldwide. Decisions will be made about these sites by the end of the first quarter of 2010. The remaining 32 production sites are to be optimized as part of BASF’s global production network or restructured. By the end of 2010, BASF also aims to consolidate 36 of the former Ciba’s 70 sales and administrative offices and research sites with existing BASF activities.

 

As already announced, the company will retain a strong presence in the Basel region. BASF’s new Paper Chemicals division, formed in April, and the two associated business units Coatings & Starch Europe and Wet End Chemicals have been based in Basel since July 1, 2009. In addition, the European business unit for plastic additives and the global units for technology management and the restructuring of the pigments business have been relocated to the former headquarters of Ciba Holding AG in Basel. BASF is also establishing a new Business Center Switzerland in Basel that will function as a service platform for sales, finance, human resources and other activities in Switzerland. A BASF research center will be based in Basel as well.

 

BASF aims to implement restructuring measures in a socially responsible manner and has begun talks with local employee representatives. “This is unfortunately not good news for some of our employees,” said BASF Chairman Dr. Jürgen Hambrecht. “But the combined businesses can be successful in the long term only if we optimize them and exploit the full potential for synergies. I promise all our employees that we will keep the period of uncertainty as short as possible and will make decisions in a fair and transparent way.”

 

Key elements of the integration are:
- Ciba’s and BASF’s paper businesses will be bundled and restructured within the newly formed Paper Chemicals division. BASF will become a world leader with a comprehensive portfolio in a market that is currently undergoing major structural transformation.
- All Ciba’s coatings effects activities are to be integrated into BASF’s Dispersions & Pigments division, which is organized in regional business units. BASF will become the world’s second-largest provider of raw materials for the coatings and paints industry.
- Ciba’s plastic additives business will be integrated into the Performance Chemicals division. This will extend BASF’s portfolio to cover important product segments such as UV stabilizers and antioxidants, making BASF the world leader in plastic additives.
- The majority of Ciba’s water treatment business will be integrated into the Performance Chemicals division. A strategy for the water treatment business will be developed by 2010.
- Ciba’s Home & Personal Care business will be integrated into the existing structure of the Care Chemicals division.

quoted from: BASF

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BASF Reorganizes its Petrochemicals Division

BASF reorganizes its Petrochemicals Division
- Intensified customer interaction
- Enhanced efficiency and effectiveness 

BASF reorganizes its Petrochemicals division effective July 1, 2009. The future organization consists of four (formerly six) business units. The optimized organizational structures will lead to higher efficiency and effectiveness and will open up potentials to even better serve customers´ needs. Customers will benefit from a reduced number of interfaces and a broader portfolio of the respective business units. The new clustering of businesses also comes along with new business opportunities as well as synergy effects out of the BASF Verbund.

The new organizational setup is based on a thorough analysis of the market and economic situation, which has fundamentally changed over the last years. Exemplary for this change are the important BASF investments in Nanjing (China) and Port Arthur (USA).

The details of the reorganization are as follows:
- The new business unit Basic Petrochemicals Europe, headed by Dr. Uwe Kirchgäßner, comprises the businesses for cracker products and industrial gases as well as alkylene oxides and glycols in Europe. This reflects a focus on the ethylene based value chain.
- The businesses for acrylics as well as alcohols, solvents & plasticizers in Europe will be consolidated in the new business unit Industrial Petrochemicals Europe, headed by Dr. Detlef Kratz. This reflects a focus on the propylene and raffinate based value chain.
- All businesses of the Petrochemicals division in North America will be consolidated in the business unit Petrochemicals North America, headed by Peter Cella. 
- All businesses of the Petrochemicals division in Asia Pacific will be consolidated in the business unit Petrochemicals Asia Pacific headed by Sanjeev Gandhi.

quoted from: New Kaznak

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BASF to Close, sell 23 Former Ciba Sites, Cut 3,700 Jobs

LONDON ICIS news)--BASF intends to sell or close 23 of 55 former Ciba Speciality Chemical production sites worldwide as it integrates its acquisition of the Basel, Switzerland-headquartered producer, the chemicals giant said on Monday.

BASF plans to cut 3,700 jobs as part of the process as it seeks to generate annual cost savings of €400m ($560m) a year from 2012. 

Savings of about €300m a year were expected by the end of 2010 when most of the job cuts will have been made, it said.

A decision on the production sites was expected by the end of the first quarter of 2010. The remaining 32 production sites would be optimised, absorbed into the BASF global network or restructured, it added.

BASF has already said it would retain a strong presence in Ciba’s home city. Its new paper chemicals division is headquartered there and two associated business units: Coatings & Starch Europe and Wet End Chemicals.

The European plastics additives business and units for technology management and restructuring of the pigments business have been relocated to the former Ciba headquarters. It has established a new Business Center Switzerland in Basel.

The job reductions represent about 28% of the former Ciba workforce of 13,000 although job cuts within BASF have not been ruled out, BASF said in a Reuters report.

“This is unfortunately not good news for some of our employees,” BASF CEO Jurgen Hambrecht said. “But the combined businesses can be successful in the long term only if we optimise them and exploit the full potential for synergies.”

The integration process is expected to cost €550m ($775m) in cash, with about €150m charged in 2009. Non-cash integration costs will be reported in the company’s second quarter financial report.

BASF closed its $5.1bn acquisition of Ciba in April.

quoted from: ICIS.com

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BASF to Close the Styropor (EPS) Plant

BASF to close the Styropor (EPS) plant and further adjust its production services at its Tarragona site
85 BASF jobs affected
Measures to safeguard sustainable future of BASF in Tarragona, Spain
Iberian Styropor market to be supplied from Ludwigshafen, Germany

BASF will shut down the Styropor® plant (EPS, expandable polystyrene) at its site in Tarragona, Spain. The closure is scheduled for August 2009. As a direct consequence of the plant closure and due to the current downturn in BASF's key markets in Spain, the company will also adjust the structure of production services in Tarragona. In total, 85 BASF employees working in production and related services such as maintenance, engineering and logistics are affected by these measures. This amounts to 9 percent of all jobs of BASF Española S.L..

　

The Styropor plant has become uneconomical due to its relatively small production capacity which has resulted in an unfavorable cost-structure. “The decision to close the Styropor plant does not mean that BASF will retreat from the Iberian EPS market," said Giorgio Greening, head of the Global Business Unit Foams. "BASF will continue to supply the region with high-quality EPS from Ludwigshafen, Germany and intends to defend its market share”

quoted from: New Kaznak

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BASF Plans more Short-Time Working for 1,000 at Ludwigshafen

LONDON (ICS news)--A further 1,000 BASF employees will be put on short-time working over the next four months, the German chemicals major said on Thursday.

The reduced hours would be introduced at 20 plants at its main production site in Ludwigshafen, Germany, mainly on pigments, intermediates, petrochemicals and inorganics units, BASF said.

Most of the cutbacks would be made in June but the plan will extend into September, the company said. 

BASF employs 32,765 at the Ludwigsafen site.

Currently, 5,200 employees from its group companies are on short-time working at 19 sites in Europe, with approximately 4,000 in Germany. This total includes workers at the former Ciba Specialty Chemical sites.

Approximately 25% of the company's production capacity has been off line this year. 

“Capacity utilization rates at many plants have remained very low since the beginning of the year, and we do not expect any improvement over the summer months,” said Harald Schwager, BASF’s executive director for human resources and head of the Ludwigshafen site.

“Short-time work is an appropriate measure to temporarily bridge the decline in orders. Without these measures, short-time work would have already been introduced for thousands of BASF employees in Ludwigshafen,” Schwager said.

BASF said in April that it was considering short-time working for up to 3,000 employees at Ludwigshafen.

Short-time working lets BASF cut working hours by between 20% and 40% for up to four months while employees receive a net wage of about 90% provided by the company and by the German government.

The rapid re-introduction of normal hours would be possible at any time should demand pick up.

Similar government-backed schemes are available in Belgium and Italy.

BASF has warned, however, that 2009 will continue to be difficult, with demand likely to be depressed. 

It said it was expecting to cut its global workforce by at least 2,000 this year, including divestments, but excluding any restructuring of newly acquired Ciba.

BASF had 92,000 employees at the end of 2008.

quoted from: www.ICIS.com

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BASF Delays Ethylene Expansion and MDI Project in China

Recently, a senior official of BASF told Chinese media that the company will delay two proposed projects - the jv ethylene expansion project in Nanjing, Jiangsu Province and the greenfield MDI in Chongqing.

According to the company, because the global economic crisis and the weak market demand, BASF will delay the two proposed projects, but the new schedule for these projects is not disclosed.

The jv ethylene expansion project is operated by YPC-BASF, which was planned to expand ethylene capacity to 750,000 ton/year from 600,000 ton/year by H2 2009 or H1 2010.

The proposed MDI project is located in Chongqing Chemical Industry Park (CCIP) Chongqing, which has capacity of 400 kt/a crude MDI to meet growing demand for this product in China. BASF has signed a MOU for the MDI project in Jun. 2007 with Chongqing Chemical and Pharmaceutical Holding (Group) Company and local authorities. And the project was expected to start up in 2012.

For the Chongqing MDI project, BASF also faced with the argument about the environment issues. 

On Jan. 2009, BASF got environmental approval from China’s Ministry of Environment Protection (MEP) for its proposed MDI project in Chongqing, with total investment of USD 1.18 billion, the project includes 400,000 t/a nitrobenzene, 300,000 t/a aniline, 400,000 t/a crude MDI and refining facility, 20,000 t/a MDI pre-polymer, storage facility and other utilities. According the BASF, the MDI project will use the most advanced technologies in environmental protection and met China's standard for discharge of pollutants.

But after the environmental approval disclosed, some Medias and environment protection organizations argued that if there is a huge risk of water resources safety as the MDI project may impact the Yangtze River and the Three Gorges Reservoir area. 


It is reported that BASF will suspend expanding capacity on a large scale of a petrochemical project in Nanjing, China. The Chairman, Mr He Binjie, said that they decided to suspend the expansion scheme of ethylene cracking plant in Nanjing, considering there would be no rebound in the global chemical market this year. 

The executive director of BASF, Pu Mule who is responsible for the East Asian market stressed that BASF has not given up plans to expand capacity, but has only decided to delay the pace of investment due to the current market conditions and will review the expansion as soon as the situation improves.

The project is a joint venture in Nanjing with China Petrochemicals entailing an investment of US $900 million aimed at expanding the ethylene cracker capacity from current 600,000 tons per year to 750,000 tons.

quoted from: New Kaznak

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Ciba Posts $35m Q4 Loss on Demand Collapse

SINGAPORE (ICIS news)--Ciba has booked a net loss of Swiss Franc (Swfr)41m ($35.3m) for the quarter to December 2008 as demand substantially weakened during the period, the Switzerland-based specialty chemicals company said on Tuesday.

The company reversed a net profit of Swfr84m recorded in the same period a year earlier.

 “We faced some significant challenges in 2008, with raw material costs reaching unprecedented levels in the first half and a dramatic drop in demand towards the end of the year, as the economic downturn took hold,” said Brendan Cummins, CEO of Ciba.

Net sales in the October-to-December 2008 period tumbled 19% on year to Swfr1.28bn as the company’s key markets were hit by the economic slump.

Ciba’s net loss for the period included a Swfr36m restructuring charge and Swfr39m of expected related to its acquisition by German chemical firm BASF.

“The outlook for the economy over the next few months is very unclear. Raw material costs have started to ease, but we are not expecting market demand to show any meaningful recovery until late in 2009 at the earliest,” Cummins said.

“Our focus is to make sure our production capacity is well balanced with the reduced demand, and that the fundamental structures of our business are fully optimized,” he added.

Separately, Ciba affirmed that the acquisition by BASF is on track to close in the first quarter of the year.

“There are still outstanding regulatory approvals from the competition authorities required before BASF can take full control of Ciba, but these are expected to come through in time to close the transaction in the first quarter of 2009,” Ciba said.

source: www.ICIS.com

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BASF Takes Steps to Optimize Its Structures

*Performance Products segment sharpens focus on customer industries
*New operating division Paper Chemicals established
*Preparations to integrate Ciba businesses
*BASF reviews strategic options for its leather and textile chemicals business

Details of the organizational changes as of April 1, 2009 are as follows:

BASF's segment structure (Effective January 1, 2008)

source: http://kaznak.web.infoseek.co.jp

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BASF Remains Upbeat on Asian Engineering Plastics Ops

By Prema Viswanathan

NEW DELHI (ICIS news)--Despite the global economic meltdown and the petrochemical downcycle, BASF's engineering plastics business in Asia remains relatively unscathed, a senior executive of the German chemical major said on Thursday.

"Despite the decline in demand seen in the automotive sector, which is a key consumer of engineering plastics, no orders have been cancelled in Asia or elsewhere in the world," BASF Asia-Pacific group vice president for engineering plastics Hermann Althoff told ICIS news in an interview on the sidelines of PlastIndia 2009. 

Engineering plastics such as polyamide and polybutylene terephthalate (PBT), which were niche, customised products, are not as sensitive to market volatility as high volume commodity plastics, he said.

Asia would be a key market for BASF's engineering plastics business in the coming years, Althoff said. 

"Asia occupies No 3 position in terms of our sales, after Europe and North America, but is currently the fastest growing market," he added.

"Even though automotive sales has declined in Asia in recent months, our sales of polyamide and PBT continue to be robust, largely because we are able to offer cost-effective solutions to our customers to help them tide over the ongoing global economic crisis," Althoff said. 

The solutions offered by BASF to automotive makers, for instance, included innovative products that reduced production cost, increased fuel and energy efficiency, enhanced safety and reduced emissions, he said.

"By replacing metal components with engineering plastics in India's low-cost Tata Nano car, which will start production in early 2009, we have been able to reduce the weight and increase cost savings for the car maker," said Althoff.

Even aluminium parts were 40-50% heavier than plastic parts, he said. "By substituting metal car seats with those made from engineering plastics, we have been able to reduce weight by 40% and cut production cost by 25%," he pointed out. 

The one-shot moulding process also speeded up the production process, which would otherwise have consisted of 22 assembling steps and been more labour-intensive, he said.

In the case of electrical and electronic applications, BASF offers halogen-free flame retardant materials made of polyamide and PBT which eliminate waste disposal issues, Althoff said. 

"These materials are also less dense than halogenated materials, and therefore more cost-efficient."

BASF's new Ultramid PBT grades conform to the new regulations imposed by the European Union for products coming in contact with food items and were therefore an attractive option for Indian customers seeking to export to Europe, Althoff added. 

The German major, which is one of the world's leading engineering plastics makers, had no intention of shutting down its plants in Asia or elsewhere, he said. 

"India and China are important markets for us, which is why we have set up compounding plants there," said Althoff. 

BASF had set up a 45,000 tonne/year polyamide and PBT compounding plant in Shanghai, China in 2007 and expects to achieve mechanical completion by the second quarter of 2009 for a 9,000 tonnes/year compounding plant in Mumbai that would cater to Indian customers. The company also has compounding plants in South Korea and Japan. 

The raw materials polyamide and PBT for the Asian compounding plants come mainly from BASF's polyamide and PBT plants in Malaysia, which also feed the 45,000 tonne/year compounding facility in Pasir Gudang, Malaysia.

The low per capita consumption of engineering plastics by the automotive industry in Asia offers a significant opportunity for growing the company's presence in the region, said Althoff. 

"Compared to European cars, which use 25kg of polyamide each, South Korean cars use only 15kg, Japanese cars 7kg, and Indian and Chinese cars less than 7kg. So there is tremendous scope for replacing metal car parts with engineering plastics."  

PlastIndia 2009, India's largest plastics exhibition and conference, started on Wednesday and ends on Monday.

source: www.ICIS.com

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BASF Issues Profits Warning, Introduces Short-Time Working

19 January 2009 13:32 [Source: ICIS news]
By Nigel Davis

LONDON (ICIS news)--BASF issued a profits warning on Monday saying that the decline in business was greater than expected in November and would negatively affect earnings. 

The world’s largest chemicals group said it would introduce short-time working for 1,680 employees at German facilities manufacturing products for the automotive industry.

Such arrangements could be implemented rapidly elsewhere in Europe, it suggested, warning that job losses could be necessary in other regions.

BASF said in November in a first warning on 2008 profits that it did not expect full year operating profits before special items (EBIT – earnings before interest and tax - before special items) to reach the 2007 level of €7.6bn ($10.1bn) against the backdrop of the sharp chemicals downturn. 

December was not as good as expected in November, a company spokesman said. 

The €58bn-turnover chemicals giant generated an operating profit of €6.3bn in the first nine months of the year, driven to a great extent by the high and rising oil price through much of the period.

“The situation remains tough and difficult to predict, CEO Jurgen Hambrecht said. “We do not expect the economic environment to improve in the coming months.”

Average capacity utilisation now is less that 75%, BASF said on Monday. Only demand for crop protection products and chemicals for the good industry remains high, it added. 

It cut capacity utilisation at it six major global production sites in mid-November and said capacity utilisation was down between 20% and 25%. 

In November 80 of its plants were idled and 100 operating at reduced rates. The downturn currently affects a similar number of units with 50 idled and 130 running at reduced capacity.

The new working arrangements would affect workers in Munster, Germany, but could be extended to employees at its main manufacturing site in Ludwigshafen and to its plants in Antwerp, Belgium, BASF said. Short-time working can be avoided at the Ludwigshafen and Antwerp sites currently because of flexible manpower planning, it said.

The company has used flexible working time arrangements, such as reduced overtime and holidays, to cope with the downturn but said these were no longer sufficient to absorb the affects of production cuts everywhere.

Agreements were already in place to allow the rapid introduction of short-time working in Ludwigshafen Germany if necessary, the company said.

In Germany employees can work fewer hours or not at all for a maximum period of 18 months so as to avoid redundancy. Plant closures in North America and Asia affecting 200 jobs have already been announced but more job losses could follow, the company warned.

Financial analysts at investment bank Cazenove said they were assuming a near 30% sales decline for BASF in its core Chemicals and Plastics businesses and a sharp margin decline.

BASF's shares dropped sharply on the news and were down 4.97% at €22.60 at 12:58GMT on Monday.

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