Investor Update 2021 - BASF's new Verbund site in Zhanjiang
Investor Update 2021
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BASF's new Verbund site in Zhanjiang - Transcript Q&A September 27, 2021
Martin Brudermüller: But let's add: If we were to build an MDI plant, the probability
that it is at that site is very high.
Markus Kamieth: Of course, this way around, yes.
Martin Brudermüller: If you look at the supply situation, we have a very nice triangle:
We have SCIP (Shanghai Caojing Industrial Park) in Shanghai - there is SBPC
(Shanghai BASF Polyurethanes Company) -, and we have then, on the other hand, in
the South Zhanjiang, and we have Chongqing. I think that would be a pretty unique
footprint for MDI. I would say that is the right answer. That could be in wave 3, 4, 5, 6.
Jaideep Pandya (On Field Investment Research): What is your view on butanediol
given that it's mainly produced in a coal-based method in China? Why is BDO not listed
as expansion given significant coal-based capacity could shut down in the future?
Martin Brudermüller: China has developed in the market with the biggest
consumption and most of the producers; it's actually, for quite some time, oversupplied.
As you said, it's mainly coal based. It's very, very competitive. This is why at this
moment in time, it is not on our list of priority products to expand in China.
It is also actually not a product that benefits from the Verbund so much, unless you do
it the classical way, as we do it here in Ludwigshafen, in the "Reppe chemistry." But
that is not the preferred raw material basis for China because natural gas as a raw
material is too expensive. That's the reason why it's coal based.
In that respect, from the market opportunities, oversupplied market, not fitting to the
Verbund, we are not willing to tap into coal for this. That's the reason why it is not on
the list.
Andreas Heine (Stifel): What was used as CO2 costs per ton baked in the investment
return calculation?
Markus Kamieth: We have not only one CO2 price that we're looking at; we are looking
at this in various scenarios. We look at, of course, always prices that are oriented
towards, let's say, trading schemes and their projections of prices. But we also look
into various CO2 scenarios in various regions. There's not one price that actually is
taken into account when we look at the overall sensitivity of projects like this. But we
take various different CO2 prices into account when we do the sensitivities.
Martin Brudermüller: And if you turn it around: If, in China, a nation-wide CO2 cost
were introduced, it would actually make Zhanjiang more competitive.
Christian Faitz (Kepler Cheuvreux): You also earmarked around US$5 billion capex
for the next expansion step of your Nanjing Verbund site. Is that figure still valid?
Stephan Kothrade: We recently announced that we are going to expand some of the
existing capacities at the Nanjing Verbund site. This is ethylene amines, ethanol
amines. It's an expansion of the purified ethylene oxide as a precursor. We also expand
propionic acid, which is a very nice product as a mold inhibitor for food and feed, and
a precursor, propionic aldehyde. Then there is one smaller specialty plant, a new one,
which is towards butyl acrylate. That is a new technology. But all this, if you look at the
dimension, is at a much smaller scale than what we talk about in the South China
Verbund site.
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