INSIGHT: Looking for the systems that will re-define chemicals

08 October 2010 17:37  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS)--BASF’s focus on specialties and what it likes to call “systems solutions” is driving great change at the company.

The twin pulls of that strategy were apparent this week with the announcement of the spin-off of the Styrolution styrenics business and the gaining of further technical milestones.

BASF has long said it wants to exit styrenics - polystyrene (PS) and acrylonitrile butadiene styrene (ABS) polymers and some upstream styrene monomer production. However, it will keep expandable polystyrene (EPS) foams: materials that are widely used to insulate buildings.

In that respect EPS is a green chemical in that it helps businesses, institutions and individuals to tackle global warming.

At the other end of the scale, the chemicals giant announced on Tuesday the first industrial-scale synthesis of metal organic frameworks (MOFs). These are absorbers of gas that may be the key in future fuel systems and of heavy goods vehicles.

For any chemicals players, it is a question of placing your bets but also of playing to your strengths and of effectively managing and directing the resources you have or have developed over the years.

BASF is exiting petrochemicals and orienting the portfolio more towards specialties and solutions sources. It continues to spend heavily on research and development across a wide range of product types with a focus on the fundamental chemical, physical and biological sciences.

“The chemical industry will have more than ever an enabler function,” BASF board member Andreas Kreimeyer said at the 44th European Petrochemical Association (EPCA) meeting in Budapest this week.

Companies such as BASF, he suggested, will focus more on the function of molecules rather than on the molecules themselves.

BASF will extend its existing value chains, from oil and gas, petrochemicals, commodities and specialties towards intelligent materials; look at new feedstock sources to sustain them and exploit new areas such as organic light emitting diodes (OLEDs), lithium ion batteries and gene-based biotechnology.

The new value chains and technologies are driving a huge change process at BASF, he said.

The company has divested businesses with sales of €10bn ($13.9bn) over the past 10 years and bought others with sales of €16bn.

The latest acquisitions include the Evonik construction chemicals business; the precious metal catalyst maker Engelhard; Ciba Specialty Chemicals; and personal care products firm Cognis.

Kreimeyer suggested that the European and other developed world chemical industries need to find suitable business models to face the challenges posed by longer-term global trends and shorter-term market forces, but that innovation is the key to growth. It will open up the new technologies and new value chains on which companies can rely.

The MOF breakthrough is possibly a case in point - or at least an area on which BASF might yet place one of its bets.

BASF has been looking at these materials for more than 10 years, tapping in to ground-breaking research from US chemist Omar Yaghi.

“With their special structure and large surface area, MOFs open up new opportunities for alternative propulsion systems, in catalysis, as nanoreactors, and in drug delivery, making them hugely interesting both for industry and university research,” the company said in a statement.

MOFs have a huge internal surface area: 5,000 square metres per gram currently: Yaghi has recently synthesized a zinc carboxylate MOF with a surface area of more than twice that.

The pore size in them can be fine tuned to store more hydrogen or high energy gases and are possible storage materials in the natural gas tanks used in municipal utility vehicles.

Getting the production method right is a big step forward - and it means that it is suitable for BASF production plants.

BASF’s move from selling commodities to selling solutions is not going to happen overnight. It is a longer term trend that involves the reallocation of capital and human resources on a great scale across different parts of the world.

But it is a way in which companies of its size and type can respond to the trends that are re-shaping world markets in chemicals and other fields of industry.

For more on BASF visit ICIS company intelligence
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By: Nigel Davis
+44 20 8652 3214

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