BDO value chains are under increased competitive pressure and characterized by global overcapacities
BASF started the process to divest its shares in the two joint venture companies BASF Markor Chemical Manufacturing (Xinjiang) Co., Ltd. and Markor Meiou Chemical (Xinjiang) Co., Ltd. in Korla, China in Q4 2023.
As part of BASF’s global strategy for 1,4-butanediol (BDO), BASF has assessed the market environment and product carbon footprints (PCF) of BDO and its downstream products from different production sites worldwide.
BDO value chains are under increased competitive pressure and characterized by global overcapacities. Furthermore, carbide-based BDO and polytetrahydrofuran produced in Korla have a significantly higher PCF due to the use of coal as a base raw material and the high energy intensity of the production process. In the future, BASF will customize its global portfolio of BDO and affiliated downstream products to provide competitive low-PCF offerings.
The situation in the Xinjiang region has always been part of BASF’s overall assessment of its joint ventures in Korla. Regular due diligence measures including internal and external audits have not found any evidence of human rights violations in the two joint ventures.
Nonetheless, recently published reports related to the joint venture partner contain serious allegations that indicate activities inconsistent with BASF’s values. Consequently, BASF will accelerate the ongoing process to divest its shares in the two joint ventures in Korla, subject to negotiations and required approvals of the relevant authorities.
BASF’s presence in China remains otherwise unchanged, and the company is fully committed to its business activities and planned investments in the country. Already today, Greater China accounts for around half of global chemical production. Global growth in chemical production until 2030 will be driven by Greater China, which will account for around 80% of the total growth during the period from 2022 to 2030.
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