BASF To Expand in China, Posts 3Q Results

German chemicals giant BASF said October 29 that it will expand its cooperation with Chinese state-owned entity Sinopec.

According to a signed Memorandum of Understanding, the two intend to build a second steam cracker – for which a pre-feasibility study will be concluded by end-2018 – and to further expand their existing 50:50 joint venture (BASF-YPC) and  explore new business opportunities in China’s fast-growing battery materials market. Their existing steam cracker has capacity to produce 1mn mt/yr of ethylene, as will their second.

Sinopec is a leading chemicals producer as well as being one of China's top oil and gas firms, involved in foreign E&P, domestic shale gas, LNG imports and a potential Alaskan project.

BASF also announced October 26 its 3Q 2018 group results: net income was 10% lower year-on-year at €1.2bn ($1.37bn), although 9M 2018 profit was only 4% lower at €4.36bn.

“We completed the acquisition of significant businesses and assets from Bayer and reached an agreement on the merger of Wintershall and DEA,” said BASF CEO Martin Brudermuller, noting after the transaction agreement between BASF and LetterOne [DEA's owner] was signed, it was necessary to adjust financial reporting retroactively as of January 1 2018, with 2017 also being restated. 

CFO Hans-Ulrich Engel explained that Wintershall oil and gas results are no longer incorporated into BASF results. However, he did state that 3Q 2018 “income before minority interests from discontinued operations [effectively its Wintershall business] increased by €86mn to €235mn, mainly attributable to higher prices and volumes” while Brent oil averaged $75/b this 3Q ($52/b in 3Q 2017) and European spot gas prices were also stronger year-on-year.