Company News

Record year for BASF, styrene unit on sale and Middle East set-up
BASF is putting its styrenics business under a new company known as Styrolution, with a view to selling it. Also, it is looking at setting up a plant for antioxidant blends in the Middle East, while in its third quarter results the company has raised its outlook for the year but cautions that the good spell may not continue next year.

The German company plans to carve out its businesses in styrene monomers (SM), polystyrene (PS), acrylonitrile butadiene styrene (ABS), styrene butadiene copolymers (SBC) and other styrene-based copolymers and establish separate companies. It will retain its global business in polystyrene foams. The SM/PS capacities in Ludwigshafen, Germany, used to produce foams will also remain with BASF.

The carve-out is to be completed by January 2011, though BASF says it is open to other strategic options, like an outright sale of the styrenics business units.

It will transfer its styrenics business at production sites in Germany (Ludwigshafen, Schwarzheide), Belgium (Antwerp), Korea (Ulsan), India (Dahej) and Mexico (Altamira) to Styrolution. Separate companies will also be established in other countries, for instance in the US, Italy or China, where it has other styrenic activities, such as marketing and sales.

The company currently employs approximately 1,460 people in the styrenics business. Sales of the business were about EUR2.5 billion in 2009.

Meanwhile, the company is also looking at building a facility for customer specific antioxidant blends (CSB) in Bahrain. The new plant will be in addition to the existing tolling agreement it has for CSB with Astra Polymer in Saudi Arabia, which is mainly supplying local customers.

"With the new production facility in Bahrain, we will be able to support the fast growth of our customers in the Middle East region while providing the flexibility in supply and service speed that our customers require," explained Hans Reiners, President, Performance Chemicals Division.

In other news, the company says, compared with the same quarter of the previous year, third quarter sales increased 23% to EUR15.8 billion. For the fourth quarter, the company expects the good business development to continue, with sales of around EUR63 billion. This exceeds the peak levels of the years 2007 and 2008.

Chairman, Jürgen Hambrecht, said, "The record figures reflect the dynamics in our businesses, our improved portfolio and operational excellence, which have been able to show their full impact in the current favourable economic environment. This is the result of our efforts over the past years to implement our strategy for profitable growth. Our strength is also reflected in the very high level of our nine-month operating cash flow of EUR5.3 billion."

n spite of the current good results, Hambrecht sees a number of uncertainties in the long-term economic outlook. He said, "The positive economic development of the past months will not necessarily continue at the same pace in 2011. Risks also remain which could jeopardise a sustainable recovery. The high debt level of many countries threatens the stability of the financial and banking systems. The necessary reduction in government spending and the winding down of national stimulus programmes could dampen overall demand." Risks are also associated with volatile raw material and foreign currency markets, overcapacities, growing geopolitical tensions and protectionism through new trade barriers.