A statement issued by the German chemical company, BASF Group has voiced its concerns on the effect of the coronavirus on global chemical production, according to Industry Week.
The company has said that COVID-19 could result in a second year of falling profit and that global chemical production could be reduced to about 1.2 per cent, which would be the worst growth in the sector since the 2008 recession, and quite a significant dip when compared to the 1.8 per cent growth in 2019.
BASF has recently begun construction on a new plant complex in Zhanjiang, China, which was part of a planned investment of $10bn for the Asia-Pacific region. The company is planning to increase investment in the region from 27 per cent to 41 per cent by 2025. The new complex, once completed is set to be BASF’s third-largest site worldwide.
Not only is the outbreak of the virus rather bad timing for the new plant, but BASF is already experiencing hard times. According to Chairman Martin Brudermüller. His company faced “strong global economic headwinds” last year, he said, due to factors like Brexit – which reportedly depressed key sales markets for BASF – and the US-China trade conflict. Demand from industries like the automotive market fell significantly.
According to Brudermüller, BASF expects slight growth in most customer industries. A notable exception is cars, one of BASF’s more profitable markets: “For the automotive industry, however, we anticipate a continued decline in production,” he said. The automobile market makes up about 20 per cent of BASF sales.
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