BASF prepares to restart idled Ludwigshafen cracker - CEO

04 September 2009 16:36  [Source: ICIS news]

By Stefan Baumgarten

TORONTO (ICIS news)--BASF is preparing to restart its idled naphtha cracker in Ludwigshafen, Germany, CEO Jurgen Hambrecht said on Friday in an update on his firm's near-term outlook

The company idled the 220,000 tonne/year cracker in April amid soft demand. A second, larger 400,000 tonne/year cracker at the Ludwigshafen petrochemicals hub was kept running.

The idled cracker was currently being heated up, a process that could last several weeks, Hambrecht told Die Rheinpfalz, a regional paper in BASF's home state of Rhineland Palatine, in an interview. The company posted a transcript, in German language, on its website.

However, Hambrecht warned that the move did not signal any steep recovery in demand.

Rather, cracker shutdowns in the industry, including BASF’s, had led to shortages in certain products, in particular butadiene, he said.

A final decision on the cracker’s restart would depend on supply and demand in coming weeks, he said.

Globally, crackers were facing overcapacity, with an additional 7-8% of capacity being added this year alone to the 130m tonnes /year already in place, he added.

Hambrecht also confirmed that BASF ended short-time work at Ludwigshafen from 1 September.

However, the government-support programmes would continue to play a role in BASF’s workforce plans at other sites for some time, he said.

Worldwide, BASF was reducing jobs by about 2,000 this year, excluding the integration of the acquired Ciba specialty chemicals business which involved an additional 3,700 job cuts, Hambrecht said. 

As for the near-term industry outlook, Hambrecht warned of continued uncertainty, despite sequential improvements in business in recent months.

Compared with last year, BASF’s sales were still down 20-25%.

China, on its own, would not be able to pull the global economy out of its recession, Hambrecht said. That could only happen in conjunction with a recovery in the US.

In Germany, consumers had not yet been fully hit by the recession.

“We are not yet done with the crisis. In the near-term, Germany’s unemployment will go up,” Hambrecht said.

Next year, Germany’s car production could likely shrink by some 1m as the government’s “cash-for-clunkers” stimulus programme, which supported the industry this year, was running out, he added.

Asked about Germany’s upcoming federal election on 27 September, Hambrecht said the country needed growth in order to secure employment. At the same time, the government needed to reduce debt.

“It is the fundamental task of all politicians to strengthen Germany as a site for industrial production. This must be a first priority.”

One important growth sector for BASF and Germany as a whole could be biotechnology, which could create some 500,000 new jobs in the country by 2020, Hambrecht said.

He also defended BASF’s cooperation with Monsanto. The US agrochemicals major is often criticised in Germany, where many remain sceptical about genetically modified products.

However, Monsanto was acting responsibly and was the best partner for BASF in that sector, Hambrecht said.

“Green genetically modified technology” could become a major new division for his company in coming years, he said.

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By: Stefan Baumgarten
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