BASF exits domestic joint venture; CNPC takes over! Amid a wave of strategic streamlining, what is this global chemical giant really playing at?

First is the integrated supporting advantage: The Zhanjiang site is equipped with a 1-million-ton-per-year ethylene cracker and a 400,000-ton-per-year butyl acrylate plant—core upstream production facilities—that enable self-sufficiency in raw materials for neopentyl glycol (NPG) production. This fully integrates the entire value chain—from upstream feedstocks to intermediate manufacturing to downstream products—significantly lowering procurement and supply-chain costs while mitigating risks from external feedstock price volatility. Second is the green and low-carbon advantage: The site operates entirely on renewable energy, cutting carbon emissions by 50% compared to conventional petrochemical complexes—fully aligning with China’s ‘dual carbon’ policy and global green chemical trends, and avoiding the high retrofit costs and excessive energy consumption associated with aging facilities. More critically, there is the locational and market advantage: China’s core consumer markets for coatings and fine chemicals are highly concentrated in South and East China. Located adjacent to these key demand centers, the Zhanjiang base enjoys far superior logistics efficiency and cost advantages over BASF’s Jilin facility. BASF Zhanjiang Integrated Base, photo source: CCTV News As BASF’s largest overseas investment to date, the Zhanjiang Integrated Base carries a total investment of €8.7 billion, making it the company’s third-largest global production hub after Ludwigshafen (Germany) and Antwerp (Belgium). The base has now entered full operation. Combined with existing capacity at BASF’s Nanjing site, the company has successfully completed the strategic southward relocation of its domestic NPG production capacity—concentrating high-quality assets within the Yangtze River Delta and Pearl River Delta advanced chemical industry clusters. Its exit from the Jilin joint venture marks the final step in divesting inefficient, non-integrated, and poorly located legacy assets—signaling that BASF’s fine chemical capacity layout in China has officially entered a new phase characterized by intensification, upgrading, and integration. A Period of Intensive Adjustment: The 'Addition and Subtraction' Logic Behind BASF’s Global Strategic Realignment Exiting the 30-year-old Jilin joint venture is not an isolated business adjustment. From May to June, this global chemical giant launched a comprehensive, multi-dimensional restructuring and internal reform—clearly revealing the strategic 'addition and subtraction' logic guiding its pivot. 01 Shutting Down Inefficient Capacity On June 8, BASF officially closed its expandable polystyrene (EPS) production line at its Ulsan, South Korea site, with all production ceasing by mid-June. EPS is a core downstream product of styrene; this closure follows BASF’s strategic review of its global styrene-related businesses. According to BASF’s Asia-Pacific Petrochemicals Business Head, the move aims to concentrate on Europe’s integrated production advantages and shut down underperforming overseas capacity. Earlier, in November 2025, BASF had already announced the shutdown of its polytetrahydrofuran (PTHF) production line at the Ulsan site, consolidating that capacity into its Caojing facility in China. BASF is progressively phasing out low-marginal-return production lines across Asia and concentrating capacity at its integrated Zhanjiang base in China. 02 Divesting Non-Core Assets Coatings Business: On June 2, the European Commission formally approved Carlyle Group’s acquisition of majority equity in BASF’s Coatings business. This transaction carries an enterprise value of €7.7 billion (approximately RMB 63.44 billion). Upon completion, BASF will receive approximately €5.8 billion in pre-tax cash proceeds while retaining a 40% equity stake. As early as October 1, 2025, BASF had completed the sale of its Brazilian decorative coatings business to Sherwin-Williams for USD 1.15 billion—marking the opening chapter of the full divestiture of its Coatings division.

YY | BASF: Navigating Stormy Seas—How Does a Chemical Industry Leader Steer Its Course?

From the perspective of revenue scale and cash flow generation, BASF benefits from its global operations and diversified product portfolio, delivering stronger revenue resilience and more stable cash conversion than its peers. Over the past five years, BASF’s operating cash flow has maintained substantial net inflows annually—ranging between RMB 43.4 billion and RMB 63.7 billion (for comparability, all figures here are converted into RMB using historical exchange rates). Despite pandemic disruptions, BASF’s compound annual growth rate (CAGR) of operating net cash flow over the past three years stood at −0.02%, reflecting overall stability—whereas Dow’s and LyondellBasell’s corresponding CAGRs were −22.32% and −17.60%, respectively. However, geopolitical events have significantly impacted BASF’s net profit in recent years. Notably, in 2022, the Russia–Ukraine conflict severely restricted exploration and production activities of Wintershall—a joint venture in which BASF holds an interest—and triggered collective impairments of Russian assets, including gas transportation infrastructure. As a result, BASF’s equity-method income from non-integrated companies turned negative in 2022. Yet, absent further major impairments thereafter, net profit rebounded and continued recovering: the company reported net profits of −RMB 4.654 billion, +RMB 1.768 billion, and +RMB 9.768 billion in 2022, 2023, and 2024, respectively—demonstrating strong underlying earnings and cash-generation resilience. Facing challenges—including geopolitical uncertainty, raw material price volatility, and industry-wide sluggish growth—BASF has implemented a series of strategic adjustments in recent years. 1. Global Re-positioning: Doubling Down on China China’s chemical industry grew approximately 6.8% in 2024, while growth elsewhere worldwide was only 1.1%. This means China contributed a staggering 86% of global chemical industry growth. On one hand, China’s chemical market remains robustly expansionary; on the other, its energy costs offer significant competitive advantages. Based on this outlook, BASF has made massive investments in the Chinese market. Looking at BASF’s capital expenditure plans, its future investment focus has indeed shifted toward China: in 2024, BASF invested €3.383 billion in Asia—accounting for 52% of its total capex. The Zhanjiang Integrated Production Base, officially launched in November 2019, is BASF’s largest overseas investment to date and, upon completion, will become its third-largest global production base. Consistent with BASF’s strengths in high-end and low-carbon technologies, the Zhanjiang base aims to fill domestic gaps in high-end chemical products. 2. Strategic Refinement and Divestiture of Non-Core Businesses In September 2024, following Dr. Kai Lü’s appointment as CEO, BASF restructured its organizational architecture—reclassifying its former six business segments (Materials, Chemicals, Surface Technologies, Industrial Solutions, Agricultural Solutions, Nutrition & Care) into two categories: 'Core' and 'Autonomous' businesses—subject to differentiated management. Core businesses cover Chemicals, Materials, Industrial Solutions, and Nutrition & Care. Autonomous businesses include Surface Technologies and Agricultural Solutions. Going forward, the Group will concentrate on developing core businesses to drive profitability growth. For autonomous businesses, the Group intends to grant greater strategic and operational flexibility, actively pursuing portfolio optimization options—including asset divestitures, IPOs, or partnerships with external parties.

BASF VP Jens Hildebrandt: Foreign Investment in China Shifts to 'In China, For the World'

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At the Caixin Summit, BASF VP Jens Hildebrandt stated that foreign investment strategies are shifting to 'In China, For the World,' emphasizing local R&D and raw material sourcing for global supply chain stability.

caixin

2026-11-12

BASF VP Jens Hildebrandt: Foreign Investment in China Shifts to 'In China, For the World'

BASF VP Jens Hildebrandt: Foreign Investment in China Shifts to 'In China, For the World'

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