Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
  1. Homepage
  2. Equities
  3. Germany
  4. Xetra
  5. BASF SE
  6. News
  7. Summary
    BAS   DE000BASF111


Delayed Quote. Delayed Xetra - 07/30 11:42:42 am
66.22 EUR   -0.81%
07/30BASF SE : Baader Bank reaffirms its Buy rating
07/29BASF SE : DZ Bank reiterates its Buy rating
07/29Eni, BASF Launch Biofuel R&D Initiative
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

U.S. plastics from gas threaten European petchem industry

06/14/2013 | 06:43am EDT
Factory of German chemical company BASF is pictured in Ludwigshafen

FRANKFURT (Reuters) - The oil-dependent European petrochemicals industry could be in for a body blow as U.S. rivals seek to get a wider range of raw materials out of cheap shale gas to make more plastics, coatings and adhesives.

U.S. players including Dow Chemical (>> The Dow Chemical Company) and Enterprise Products Partners (>> Enterprise Products Partners L.P.) are building facilities to convert gas into propylene, a key building block for advanced materials that has so far required the oil distillate naphtha as feedstock.

This could further squeeze margins and endanger jobs at European plants that convert naphtha into precursor chemicals ethylene and propylene, the backbone of the more than 130 billion euro ($167 billion) petrochemical industry in Europe.

The European facilities, run by global players including BASF (>> BASF SE), Sabic (>> Saudi Basic Industries Corporation), Ineos <INEOSG.UL> and LyondellBasell (>> LyondellBasell Industries NV), are particularly vulnerable to any price decline in propylene, which goes into acrylic glass, insulation foam and construction glues, as extra U.S. output has already slashed the price of ethylene.

Forty-eight of these sites, called steam crackers, are spread across Europe, mainly in Benelux, Germany and France.

The companies that run them can shift investment elsewhere, but jobs will be at risk in Europe; the industry employs 115,000 directly and up to 460,000 indirectly, in a region that hit a record 11 percent unemployment in April.

According to a Bernstein Research note last month, BASF is eyeing a $600 million investment in a new U.S. gas-to-propylene plant. The company declined to comment.

Shale gas - natural gas from hydraulic fracturing, or fracking - has allowed the U.S. chemical industry to use cheap energy and boost output of ethylene, a basic hydrocarbon precursor for solvents, packaging plastics and detergents that can be extracted from gas.

The benefits were evident in LyondellBasell's Olefins and Polyolefins business, which boasted an operating profit margin of 20 percent in the Americas last year, compared with 0.9 percent in Europe and the rest of the world.

The Atlantic divide could widen further as they ramp up propylene output, and while health and environmental concerns stifle shale gas exploration in Europe.

Companies like Dow, Enterprise Products and Taiwan's Formosa Plastics (>> Formosa Plastics Corporation) aim to produce extra propylene volumes on the Texas Gulf Coast from 2015.

European crackers' average revenue per tonne after deduction of feedstock and energy costs has been $659 this year, versus $798 in the United States, according to market researcher ICIS.


Propylene had become scarce and expensive as the prevailing method of converting gas into basic petrochemicals - natural gas steam cracking - yields abundant ethylene but little propylene.

Steam crackers that feed on the oil distillate naphtha, the cracker type that prevails in Europe, are the main source of propylene, but only as a by-product.

More than half their output is ethylene, now made far more cheaply in the United States, where natural gas prices have plunged 50 percent in five years.

Only a price hike in by-products such as propylene and butadiene, used in synthetic rubber and nylon, has provided some relief for the European basic petrochemicals industry.

"Operators of European naphtha crackers have a problem. In a nutshell, it's about propylene, butadiene, and benzene prices. You need to be compensated somewhere for the cheaper ethylene," said London-based Berenberg Bank analyst Jaideep Pandya.

But now propylene is set to become cheaper.

U.S. oil and petrochemical groups are erecting so-called "on-purpose" propylene production sites based on propane from natural gas to end reliance on the insufficient stream of by-product propylene from ethylene production.

New on-purpose plants could add roughly 4 million tonnes to annual propylene output by 2018, 5 percent of current global production, says market researcher IHS Chemical.

BASF said many of the industry's European sites would remain competitive due to an intricate network of pipelines and proximity to customers, while imports from the Middle East and the U.S. were burdened with tariffs and transport costs.

Ineos plans to ship cheap U.S. ethane gas to its gas cracker in Norway from 2015, "to secure the long term future of its sites in Europe". But its naphtha crackers can't use ethane.

The region's downstream specialty chemical makers, which use propylene as raw material, may also be in for a shake-up.

The nascent U.S. gas-to-propylene industry is widely expected to further process its source of cheap feedstock into intermediates such as propylene oxide, acrylic acid and polypropylene in about three to five years. This could become a headache for the European advanced plastics industry.

Propylene oxides go into insulation foam chemicals made by BASF and Bayer (>> Bayer AG), while acrylic acid is the basis for adhesives, acrylic glass and glossy coatings offered by BASF, Evonik (>> Evonik Industries AG) and Arkema (>> ARKEMA).

The quickest gains for U.S. propylene makers would be to expand into polypropylene, a standard plastic used in packaging, sticky tape and ropes, which plays only a minor role in European production, but they wouldn't stop there.

Chuck Carr, a Houston-based petrochemicals adviser at IHS said the first 3 million tonnes of new annual U.S. propylene would address the domestic shortage but everything beyond could go oversees in the form of specialty chemicals and plastics.

"We're going to add enough to export," he said.

(Editing by Will Waterman)

By Ludwig Burger

© Reuters 2013
Stocks mentioned in the article
ChangeLast1st jan.
ARKEMA 0.94% 107.25 Real-time Quote.14.71%
BASF SE -0.81% 66.22 Delayed Quote.2.32%
BAYER AG -1.70% 50.29 Delayed Quote.4.43%
E.ON SE -0.78% 10.372 Delayed Quote.14.43%
ENTERPRISE PRODUCTS PARTNERS L.P. -1.27% 22.57 Delayed Quote.15.21%
EVONIK INDUSTRIES AG -0.41% 29.3 Delayed Quote.9.82%
FORMOSA PLASTICS CORPORATION -2.16% 99.8 End-of-day quote.3.53%
LANXESS AG -0.29% 61.06 Delayed Quote.-2.71%
LYONDELLBASELL INDUSTRIES N.V. -1.19% 99.33 Delayed Quote.8.37%
MSCI TAIWAN (STRD) -0.74% 690.203 Real-time Quote.15.72%
RHÖN-KLINIKUM AG -0.50% 15.9 Delayed Quote.-3.64%
ROYAL DSM N.V. 0.65% 169.95 Real-time Quote.20.70%
SAUDI BASIC INDUSTRIES CORPORATION 0.50% 121 End-of-day quote.19.33%
SEEK LIMITED -2.63% 29.27 End-of-day quote.2.59%
SHIFT, INC. -2.48% 20080 End-of-day quote.40.32%
All news about BASF SE
07/30BASF SE : Baader Bank reaffirms its Buy rating
07/29BASF SE : DZ Bank reiterates its Buy rating
07/29Eni, BASF Launch Biofuel R&D Initiative
07/29BASF : Eni and BASF launch joint R&D initiative to reduce the CO2 footprint of t..
07/29BASF SE : Deutsche Bank remains its Buy rating
07/29BASF SE : Berenberg sticks Neutral
07/29BASF SE : JP Morgan gives a Neutral rating
07/28BASF SE : Credit Suisse reiterates its Buy rating
07/28BASF SE : NorldLB remains Neutral
07/28BASF SE : Barclays sticks Neutral
More news
Sales 2021 74 023 M 87 843 M 87 843 M
Net income 2021 5 264 M 6 247 M 6 247 M
Net Debt 2021 14 858 M 17 632 M 17 632 M
P/E ratio 2021 11,2x
Yield 2021 5,16%
Capitalization 60 822 M 72 149 M 72 177 M
EV / Sales 2021 1,02x
EV / Sales 2022 1,03x
Nbr of Employees 107 646
Free-Float 100%
Duration : Period :
BASF SE Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends BASF SE
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 23
Last Close Price 66,22 €
Average target price 79,88 €
Spread / Average Target 20,6%
EPS Revisions
Managers and Directors
Martin Brudermüller Chairman-Executive Board
Hans-Ulrich Engel Chief Financial & Digital Officer
Kurt Wilhelm Bock Chairman-Supervisory Board
Melanie Maas-Brunner Chief Technology Officer
Anke Schäferkordt Independent Member-Supervisory Board
Sector and Competitors
1st jan.Capi. (M$)
BASF SE2.32%72 149
ROYAL DSM N.V.20.70%34 430