Ludwigshafen, Germany - The fight against overcapacity in the chemicals and plastics business is a crucial one in the current economic situation, stressed BASF SE's chairman Dr Juergen Hambrecht, during the group's discussion of its 2009 financial results in Ludwigsghafen, 25 Feb.
"Business is coming out of the deepest trough, and volume declines are still not recovered," Hambrecht said, adding that as well as cutting capacity in styrenics, BASF has cut capacity in caprolactams, in TDI (toluene diisocyanate) for polyurethanes, in ethylene oxide, as well as in polyethylene, PVC (polyvinyl chloride) and polypropylene.
But there has not been enough capacity taken out, and the business "will have to fight against overcapacity in future," he said.
BASF has closed capacity and acted responsibly, cutting 40 percent of capacity in its paper chemicals business, and the same for coatings and some other segments, the BASF chairman said.
He noted that all segments "will clearly improve over the coming year." But he pointed out that when the base line the improvement comes from is Q4 of 2008 and the "miserable" Q1 of 2009, that, "gives enormous growth rates, which are not true ones."
Hambrecht also pointed to the inventory effect, saying "customers are very very careful in ordering," and "not stocking up as they used to."