2010-07-05 [Source: URETHANES TECHNOLOGY INTE]

FRANKENTHAL, GERMANY (July 2, 2010) -– BASF SE's goal is to have 20 percent of its chemicals sales in Asia, and to grow at 2 percent ahead of the market there. This means it needs to achieve 5-6 percent annual growth, bringing sales in Asia to 20 billion euros (167 billion yuan) by 2020. "That's the aim," said Martin Brudemueller, BASF board member responsible for plastics and Asia Pacific.

BASF will also invest up to 11 billion euros (92 billion yuan) there over five years in various projects, Brudermueller added, in his opening address at BASF's preview for the K2010 plastics exhibition being held in Dusseldorf, 27 Oct - 3 Nov.

Discussing capacity utilization in its plastics businesses, Ken Lane, BASF's senior vice president of strategic marketing for polyurethane, said BASF has seen a "quite significant increase in demand in the first half of 2010," for PU materials and that now there is "some tightness" in the supply chain.

Going forward, BASF sees that there will be restocking and the need to keep up with inventory relatively widely in the supply chain, Lane added.

In terms of growth rates in plastics, Brudermueller said the figure is greater than 5 percent for the whole range, noting that individual products are significantly higher than this. As an example, he cited past growth rates of 20 percent a year in the PU raw material MDI (methylene diphenyl diisocyanate) in China, saying that future MDI growth will be about 10 percent annually.

In this context, Brudermueller said BASF's plans for a 400-kiltons per annum MDI plant in Chongqing in western China -- the "largest single train MDI plant in the world," -- are progressing normally, and it is currently going through the process for government and local authority approval.

Lane noted that the site has been prepared, and engineering work is expected to be completed in 2013, with start-up planned for the first quarter of 2014.

Brudermueller added that BASF's goal to grow profitably and faster than the market would be achieved by intensive research, developing a cyclically resilient portfolio and capital expenditure, in particular in Asia.

BASF expects significantly improved earnings and sales for 2010, with the first quarter's figures giving grounds for optimism, said Brudermueller. BASF's sales declined 20 percent during 2009, to 7.1 billion euros (59 billion yuan), with operating income of 554 million euros (4.6 billion yuan), which was slightly higher than in 2008. But Brudermueller said that Q1 of 2010 saw sales rise by 50 percent to over 2 billion euros (16.7 billion yuan), compared to "the "very weak first quarter of 2009.

Higher capacity utilization resulting from stronger demand and BASF's restructuring measures led to significant improvement in operating income, he added, pointing out that BASF expects demand for its products to "remain volatile," with "structural overcapacities" for a number of products – including propylene oxide, used to make polyols for the polyurethanes sector.