By Liz White, UT editor
Ludwigshafen, Germany-BASF AG has shut down its tetrahydrofuran (THF) plant in Caojing, near Shanghai. The group's chairman Dr Jürgen Hambrecht said in BASF's third quarter results statement that the unit was "shut down following a malfunction, and we now plan to mothball the plant in the first quarter of 2007."
"This step is being taken due to persistently high prices for the raw material butane, to allow better use of BASF's global production network, and to take account of emerging capacities in China," Hambrecht added.
BASF built the THF plant to supply its Poly-THF production unit, which supplies the material to the growing spandex fibre and thermoplastic polyurethanes business in China. The 80 kilotonnes a year THF plant, which started up in early 2005, uses novel technology to oxidise butane directly to THF, rather than going through 1,4-butanediol, the conventional route.
The plant supplied THF to the 60 ktpa Poly-THF unit. Hambrecht did not clarify whether the Caojing poly-THF plant would continue operating.
BASF makes the materials in Asia at Yokkaichi, Japan and Ulsan, Korea, as well as at Ludwigshafen and as a US site in Geismar, Louisiana. It has total THF and PolyTHF capacity of 230 and 200 ktpa respectively.
'Dynamic growth' in sales
Meanwhile, BASF reported total sales up 28 percent to Euro13 300 million: its newly acquired businesses-Degussa Construction Chemicals, Engelhard and Johnson Polymer-contributed Euro 1800 million "to this dynamic growth," commented Hambrecht.
Income from operations (EBIT) before special items rose by 22 percent to Euro 1600 million in the third quarter, he added.
Hambrecht pointed out the continuing strong growth in the global economy, where "Asia, and China especially, continue to act as a powerful growth engine." In North America, the economic climate is "robust despite a few negative indicators. And the upturn continues in Europe," said the BASF chairman.
Germany is also benefiting, with consumers more confident, also as a result of the decline in oil prices, although Hambrecht is not sure if this latter trend will last.
"Geopolitical tensions and regional conflicts are continuing to result in highly volatile raw material prices, which are now also impacting agricultural products," he commented.
Special items in income from operations were primarily related to the mothballing of the THF plant in Caojing, China, which reduced EBIT by around €200 million, reported Kurt Bock, BASF's chief financial officer.
BASF's polyurethanes business reported a sales incease of 15 percent to Euro 1239 million, with EBIT for the total plastics segment up 18 percent to Euro 306 million (total plastics sales rose 10 percent to Euro 3256 million).
Hambrecht said BASF Polyurethanes, "greatly increased volumes and sales due to strong worldwide demand." But BASF struggled to pass hikes in raw material costs in polyurethanes on to the market, he added.