Strategic Arrays: BASF’s Blueprint For Winning Focuses On Mapping & Driving Value, But Is Not Without Risk

Daily Chemical Reaction

Strategic Arrays: BASF’s Blueprint For Winning Focuses On Mapping & Driving Value, But Is Not Without Risk

Key Findings

• General Thoughts: Our takeaways from the first day of BASF’s capital market day highlight a strategy to unlock and drive value despite challenging market conditions – far from without risk, but also likely the right strategy.
• Supply Chain/Commodities: We highlight that BASF is not the only chemical company, especially in Europe, that is undergoing strategic reviews and likely restructurings, with LyondellBasell also being a significant example.
• Energy/Upstream: We discuss the high-cost energy and chemical feedstock setting in Europe and efforts that are coming forth to cut off/shift LNG import supply that keeps uncertainties high among its manufacturers/industry.
• Sustainability/Energy Transition: US tariffs on EVs, Batteries, and solar panels from China are poised to increase tomorrow, while proposed European tariff upticks on China in October mainly target EVs.
• Downstream/Other Chemicals: We discuss falling German export market sentiment amid its high relative costs and weak demand and the challenges facing European manufacturers, also evidenced by BASF initiatives.

Exhibit 1: BASF management launches its winning ways strategy at its capital markets day, focusing on its core businesses (~57% of 2023 adj. EBITDA) and unlocking value from the stand-alone units (~43%).

Source: BASF – Capital Market Day Slides, September 2024

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