Basf Touts Bumper China Project's Long-Term Payoff  

BASF Bets on China with €9B Chemical Complex for Sustainable Growth

BASF's Strategic Expansion and Market Outlook in China

By Patricia Weiss

Largest Investment in Company History

FRANKFURT, March 21 (Reuters) - BASF has underscored the need to boost its China presence with the single largest investment project in the company's history to tap into long-term growth there even as global markets cool down. 

The German chemical group's executive board member in charge of Asia, Stephan Kothrade, told Reuters the company needed to overcome an "absolute underrepresentation" of China within the group's global network of chemical plants.

Zhanjiang Chemical Complex: Project Details

The executive spoke to Reuters ahead of the planned opening ceremony on March 26 of its new chemical complex in southern China's Zhanjiang, which is costing it about 9 billion euros ($10.4 billion) to complete by 2028. 

While demand from China makes up about half of global chemicals markets, the country accounted for only 14% of BASF's global revenues.

Long-Term Sales Growth Projections

Kothrade said that thanks to the Zhanjiang project, China would account for about one fifth of group sales by 2030, but BASF took a far longer view.

"We build such a plant to last 40, 50 years or more," said the executive.

Sustainability and Production Capacity

The new complex, to be powered entirely with electricity from renewables, will produce petrochemicals and key materials for industrial use. 

Market Challenges and Competitive Position

The company warned last month that global manufacturing growth would slow significantly this year amid geopolitical tensions, after reporting a drop of almost 10% in 2025 operating profit. 

"Of course, we would have preferred supply and demand to be more in balance at the time of ramp-up," Kothrade said, adding that production at the site would grow slower than initially hoped.

“We can still compete at current price levels, whilst many of our competitors’ plants are simply standing idle or operating below capacity,” he added.

Financial Targets and Geopolitical Risks

BASF was upholding its target for the site to generate between 1.0 and 1.2 billion euros in earnings by 2030. 

The company said the U.S.-Israeli war in Iran had not altered its plans in China. Overall, the situation was volatile and the conflict's financial implications were not yet fully clear, it added.

Political Concerns and Risk Mitigation

Government concerns over recent years that the German economy is growing too reliant on China amid increasing tensions between China and Europe have long brought BASF's Zhanjiang expansion project into Berlin's focus. 

Kothrade sought to allay fears, in particular, that China's increasingly assertive sovereignty claims on Taiwan could escalate into an armed conflict.

"That would be a situation with only losers on all sides. Nobody would gain from it," he said.

($1 = 0.8648 euros)

(Reporting by Patricia Weiss, Writing by Ludwig Burger, Editing by Friederike Heine)