BASF China 2026 Strategy: "Dual-track" Layout of Zhanjiang's Core Capacity Release and Downstream Market Penetration

1. supply-side milestone: Zhanjiang base "heart" pacing, opening a new era of integrated operations.

On January 7, 2026, global chemical giant BASF announced its single largest investment in China-- zhanjiang integrated base annual output of 1 million tons of ethylene combined plant successfully put into operation. For global chemical traders, this marks a substantial shift in the supply landscape of Asian petrochemicals.

• Core Asset Value: as the "heart" of the base, the ethylene plant is not only for the already put into production. 500000 tons/year polyethylene (PE), **2-ethylhexyl acrylate (2-EHA)** and citral plants provide low-cost, highly reliable internal feed streams, further establishing BASF's supply chain dominance in South China.

• Global coordinates: as the Zhanjiang base (about 4 square kilometers) shifts from the construction period to the operation period, it has officially become BASF's third largest integrated base in the world, compared with Ludwigshafen in Germany and Antwerp in Belgium.

2. downstream trade perspective: paint business penetrates the supply chain of state-owned enterprises and profitability challenges.

BASF is deeply encroaching on China's local high-end manufacturing market through the dual means of "agency mode + localized production", and its trade logic has undergone profound changes:

1. Channel sinking: locking in large orders of local car companies BASF has recently successfully cut in through first-tier agents. Dongfeng Liuzhou Automobile2026 supply chain, contract size of more than 35 million yuan. This sends a strong signal that foreign giants no longer only serve joint venture brands such as BBA, and their sales tentacles are reaching out to local OEMs such as BYD, Xiaomi and Dongfeng.

2. Financial data perspective: an early warning of increasing revenue but not profit. Relying on BASF Shanghai Coatings Co., Ltd(60% stake), BASF's coatings business in China presents complex financial characteristics:

• revenue scale: in the past five years, it has remained around 4.8 billion yuan. Although there are fluctuations, the base plate is stable.

• Profit pressure: data for the first half of 2025 show that although revenue increased slightly by 3.1 per cent year-on-year, net profit fell sharply by 17.38 per cent.

• Trade advice: the narrowing of profit margins indicates that the price war in the Asian automotive coatings market has entered a white-hot. For distributors, BASF's global divestiture restructuring (e. g., divestiture of the decorative paint business) signals a shift to an "asset-light, high-yield" model that may rely more heavily on core patented products in the future.

3. global market research: China as a "safe haven" and "growth pole"

in the "most difficult time in 25 years" defined by BASF CEO Dr. Kelly, the strategic position of the Chinese market has been elevated to an unprecedented height:

• share upside down business opportunities: at present, China accounts for 50% of the global chemical market, but only 13% of BASF's sales. This mismatch means that the capacity release of Zhanjiang base is the only "ballast stone" for BASF's global performance growth in the next decade ".

• Trade flow conversion: the Asia Pacific region is the only region where BASF will achieve sales growth in 2025. With the increasing integration of Zhanjiang, the local supply of ethylene derivatives in South China, which originally relied on imports, may squeeze the space of traditional arbitrage pallets in Northeast Asia.

4. Traders and Supply Chain Decision Reference

1. FOB price changes: with the full release of ethylene and polyethylene production capacity in Zhanjiang, the FOB (FOB) competitiveness of the South China market will be significantly enhanced, and Southeast Asian buyers can focus on their export window.

2. Supply Chain Localization Opportunities: the full localization of BASF's Zhanjiang base management team means that its business decision-making speed will be improved, and it is recommended that China's local supporting and downstream processing enterprises lock in long-term supply agreements in advance.

3. Avoid homogeneous competition: in the face of BASF's strong penetration and price war in automotive coatings and other fields, small and medium-sized traders should pay attention to the market segment of specialty chemicals or customized system materials.