BASF China expansions focus on niche products

BASF IS investing in new capacity in China as part of its strategy to locate production closer to customers. But to stay ahead of the competition, it needs to focus on niche products, says Bernd Blumenberg, president of the its BASF-YPC Co. (BYC) joint venture (JV) in Nanjing in China's Jiangsu province.
Germany-headquartered BASF is facing strong competition from low-cost production in the Middle East, "But we can compete by exploiting all options which extend the value chain," he remarks.

The BYC cracker complex, now being expanded, is BASF's largest in China. BASF and partner Sinopec are investing $1.4bn in the expansion, which involves raising the ethylene capacity from 600,000 to 740,000 tonnes/year and building 10 new plants downstream. New products will include 2-propylheptanol, nonionic surfactants, amines and super-absorbent polymers (SAP).

"We believe we have to be close to our customers," says Blumenberg. "There will always be an export business from Ludwigshafen. But we want 70% of business in Asia to be based on products made in Asia."

BYC, which is owned 50:50 by BASF and China's state-owned Sinopec, is broadening its product offering to supply China's widening array of industries, from construction and pharmaceuticals to automotive and chemical manufacturing.

For example, the JV will expand ethylene oxide (EO) and build new plants for EO derivatives, including nonionic surfactants, which are used in detergents, and solvents such as butyl glycol ether.

BYC will also extend its EO value chain by building a new amines complex for the production of ethanolamines, ethylene amines and dimethylethanolamine, used in the agriculture, pharmaceutical and surfactant sectors.

Simply converting all the EO to ethylene glycol (EG) would provide minimal competitive advantage compared with Saudi production, says Blumenberg. By producing additional derivatives, such as nonionic surfactants, it is possible to compete, he adds.

BYC will also develop the cracker's C4 chain with the manufacture of butadiene (BD) and isobutene, with derivatives including the plasticizer alcohol 2-propylheptanol and highly reactive polyisobutylene (HR-PIB), which is used in the manufacture of fuels and lubricants.

With a delay, the company intends to extend its acrylics chain with the production of dimethylaminoethyl acrylate (DMA3), used to produce flocculants for water treatment, and SAP, for hygiene and industrial applications.

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