According to Reuters article published on October 26, 2022, BASF (BASFn.DE) said costs at sites in its European home market need to be brought to a "permanently" lower level because of a triple burden of sluggish growth, high energy costs and over-regulation.
"These challenging framework conditions in Europe endanger the international competitiveness of European producers and force us to adapt our cost structures as quickly as possible and also permanently," CEO Martin Brudermueller said in a statement on Wednesday.
In the first nine months of 2022, natural gas costs at BASF's European sites were about 2.2 billion euros ($2.19 billion) higher than in the year-earlier period, the company added.
As part of an unscheduled release of preliminary third-quarter results two weeks ago, BASF said it would reduce annual costs by 500 million euros in Europe up to 2024, including job cuts, and it also raised the prospect of more structural cutbacks in the region to be announced next year.
The planned cutbacks are in contrast with a 10 billion euro chemical complex that BASF plans to build in Zhanjiang, southern China, to run entirely on renewable energy, as the German industry icon banks on booming Asian markets to reduce reliance on Europe.
The move defies heightened concerns in the German government over economic dependence on China as a trade partner that it sees as under increasingly authoritarian rule.
BASF has warned that Europe's planned shift to shipped liquefied natural gas (LNG), away from Russian pipeline gas, would put sites in the region at a structural disadvantage to overseas rivals with cheaper energy supplies.
Covestro (1COV.DE), a rival maker of chemicals for insulation slabs and upholstery foams, on Tuesday cut its earnings guidance, as soaring gas and raw material prices burden heavy industry players across Europe.
