Big adjustment! Basf quietly closed 11 factories in Germany and transferred to China for plant investment!

The impact of the crisis continues to ferment! Many of the world's giants shut down factories! 

Basf, a global chemical giant and the largest chemical company in Europe, has quietly left its German base. It is understood that BASF has closed its production base in Germany and transferred to China to build a factory for investment. This move sends a clear signal to the world: driven by profits, companies will redefine their trajectories.

Major strategic adjustment! Basf closes 11 factories in Germany! 

Basf, the world's largest chemical company, plans to reduce its production in Germany and move production to China, according to several media reports. 

It is understood that the main reason for this decision is that high energy costs and bureaucracy in Germany have led to the loss of BASF's German plants. This development led BASF to close a number of plants in Germany.

In Ludwigshafen, 11 production plants will be closed, including a once leading modern TDI foam production facility, which is no longer profitable and is estimated to have accumulated losses of up to €1 billion. 

At the same time, according to the German chemical industry association VCI, 20 percent of investment in the German chemical and pharmaceutical industry recently went to China. Basf's huge plant in Nanjing, China, is booming and it is investing 10 billion euros in a new plant in Zhanjiang.

 Ludwigshafen is the symbol of BASF in Germany 

Ludwigshafen is of great significance to BASF as it is the headquarters of BASF and its largest integrated chemical production site in the world. The city is closely linked to BASF's history and has long been at the heart of the company's R&D, production and operational activities. The Ludwigshafen plant complex not only plays an important role in the local economy, but also has a significant impact on the global chemical supply chain.

By the end of last year, the plant had about 38,700 employees, 430 fewer than the previous year. Many employees are upset with the company's strict cost-saving strategy and fear their jobs will be moved to China." "We do feel that everything seems to be moving to China, where jobs may be cut more and more." "Said a BASF employee. 

It is worth mentioning that not only BASF is frequently closed, but other overseas giants are also making relevant adjustments in the past two years, constantly selling non-core businesses and implementing slimming plans to cope with market changes.

Energy crisis aftereffects! Most overseas chemical revenue fell! 

It all starts with the energy crisis in Europe after the Russia-Ukraine crisis. 

Since 2022, the slowdown in the global economy, geopolitical tensions caused the chemical industry to face a number of problems such as shrinking demand, supply chain shocks and declining market expectations, resulting in a decline in the industry since the high point in 2021. According to the current 2023 annual financial report released by domestic and overseas giants, in the face of high oil prices and falling chemical prices, the performance of global chemical giants is generally under pressure, and the industry as a whole is seeking a breakthrough in weak demand.

According to the performance of the 15 important chemical giants in the world, the performance of the global chemical giants in 2023 generally declined (13/15, accounting for 86.67%). In terms of profits, in addition to Mitsubishi Chemical rose 511%, Wanhua Chemical barely increased, the rest without exception plummeted (13/15, accounting for 86.67%), of which Lotte Chemical plunged 975%, Evonik Industries AG plunged 126%, DuPont fell 92.8%, Formosa Plastic Group fell 80%. From the partial results of the first quarter of 2024, the situation has not improved.

An important reason for the sharp fall in profits: excessive cost increases. Since the conflict between Russia and Ukraine, Russia's gas supply to Europe has continued to decrease, and the gas supply of "Nord Stream 1" once dropped to 0. This has forced Europe to use high levels of natural gas as an alternative fuel. European gas prices ($4.8 / mmBTU) and electricity prices (€0.05 / KWH) are still higher than pre-pandemic levels.

Basf shifts €10 billion to China! 

In Deguan factory, but increased investment in China. Recently, the global chemical giant BASF announced a major decision - it will invest 10 billion euros to build a new gigafactory in Zhanjiang, China. 

Basf's choice is no accident. With its huge market demand, complete industrial chain supporting, and relatively low production costs, China has become an ideal investment place for global chemical enterprises. As BASF predicts, "China is the world's largest chemical market" and "will account for nearly three-quarters of global chemical production growth through 2030."

This will bring advanced technology and management experience to China's chemical industry, promote the upgrading of the industrial chain and market expansion, while creating jobs and training professionals, but it will also bring increased market competition and higher requirements for environmental standards, prompting domestic enterprises to accelerate the pace of innovation, and jointly promote the sustainable development of the industry.