BASF’s €8.7 Billion Zhanjiang Verbund Site Fully Operational

On March 26, German chemical giant BASF announced the full commissioning of its integrated Verbund site in Zhanjiang, Guangdong, with an investment of approximately €8.7 billion. This is China’s first wholly foreign‑owned heavy chemical complex and the largest single overseas investment in BASF’s history. The project was completed on schedule, with actual investment coming in below budget.

From the signing of the memorandum of understanding in 2018 to full operation, the site, covering about 4 square kilometers, took more than seven years to build. It now has full production capabilities from ethylene cracking to downstream products, with an annual ethylene capacity of one million tons. A total of 18 production plants and 32 production lines are operational, capable of producing over 70 products. The site currently employs more than 2,000 people.

Short‑Term Profit Squeeze, but BASF Bets on the Chinese Market

At the commissioning ceremony, BASF’s Chairman of the Board of Executive Directors, Markus Kamieth, pointed out that due to market conditions, the project’s profitability over the next one to two years may be lower than expected. As a result, the company has reduced its earnings forecast for 2026 by approximately €100 million.

However, he emphasized that BASF remains confident in the long‑term growth potential of the Chinese market. This means that despite current earnings pressure, the company’s investment strategy remains unchanged.

How Will the Zhanjiang Site Cope with Oversupply and High Energy Costs?

Currently, Asia’s petrochemical market faces oversupply, while European chemical companies are struggling with high energy costs. Volatility in the Middle East has further disrupted supplies of naphtha and crude oil, which are critical for petrochemical production.

The Zhanjiang site was designed with these risks in mind. It adopts a flexible feedstock strategy, allowing the use of various raw materials such as naphtha and butane. A butane supply agreement has already been signed with Canada’s AltaGas. Compared to competitors reliant on a single source, this makes the site more resilient to feedstock fluctuations.

50% Lower Carbon Emissions: World’s First Green Ethylene Cracker

The Zhanjiang site also sets high standards in sustainability. Through integrated production processes, process innovation, and the use of renewable energy, carbon emissions per unit of product are approximately 50% lower than those of conventional petrochemical sites. The site’s electricity comes 100% from renewable sources, mainly through long‑term green power purchase agreements and offshore wind power. The core ethylene cracker is the world’s first facility where all main compressors are powered by renewable electricity.

Local Manufacturing, Supported by Global Supply Chains

Products from the Zhanjiang site will mainly serve customers in China, in line with BASF’s strategy of “produce locally, serve locally.” BASF has been active in China for more than 140 years. It currently operates major production sites in Shanghai, Nanjing, Chongqing, and Zhanjiang. In 2025, the company’s sales in Greater China reached about €8.2 billion, and it employs nearly 13,000 people in the region.

The Zhanjiang site is BASF’s seventh Verbund site globally and ranks as the third largest after Ludwigshafen in Germany and Antwerp in Belgium. Germany’s Federal Minister for Economic Affairs and Energy, Katherina Reiche, noted that the project represents an important milestone for BASF in strengthening supply chain resilience and global diversification.