2024-08-10
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BASF, a global chemical giantA serious accident occurred recently.This company is located inLarge chemical plant in Ludwigshafen, GermanyOn July 29, local timeThere was a sudden explosion and fire.The explosion shocked the global chemical industry.
On the evening of August 7, BASF said that the Ludwigshafen plant was closed due to the fire accident on July 29.The resulting damage to the equipment will cause the production of some vitamin products to be discontinued and the supply to be interrupted, and delivery will become force majeure.
BASF is one of the world's major vitamin suppliers, and its explosion has spread to the vitamin industry chain.Domestic prices of vitamin A (VA) and vitamin E (VE) have risen sharply。
On August 8, the vitamin sector exploded.The Wind Vitamin Concept Index rose sharply, and stocks such as Minsheng Health, Northeast Pharmaceutical, Guangji Pharmaceutical, Shengda Biopharma, and Zhejiang Pharmaceutical once hit the daily limit.
Explosion spreads across the supply chain
The supply of VA, VE and other products will be interrupted
According to the Shanghai Securities News and China Securities Network, German chemical giant BASF announced on its official website on August 7 that due to the fire that occurred in a device at its Ludwigshafen base in Germany recently, BASF Europe (also on behalf of its affected affiliates) announced that from now until further notice,The supply of some vitamin A, vitamin E, carotenoid products and some aromatic raw materials products has been affected by force majeureThe fragrance raw materials involved include ionone, leucoderma, DL-menthol, rose oxide, ethyl linalool, nerolidol and isophytol.
The unit where the fire occurred produces aromatic raw materials and precursors for the production of vitamin A, vitamin E and carotenoids.All injured employees left the medical center that evening. The incident did not cause air, water or soil contamination. BASF's environmental monitoring vehicles did not detect any products inside or outside the plant. Relevant government departments have been informed of the incident.
The accident caused damage to the equipment, resulting in production suspension and supply interruption of the above products.BASF said cleaning, inspection and repair work on the unit has begun.
It is reported that BASF is one of the world's largest chemical companies, with 234 production bases worldwide and operations in 93 countries.
BASF's Ludwigshafen plant is one of the world's major VA and VE production bases. According to statistics,BASF's Ludwigshafen plant has a VA production capacity of approximately 14,400 tons, accounting for approximately 27% of the global total. Its vitamin E (oil) production capacity is 20,000 tons/year, accounting for 13.8% of the global total. Its raw material citral production capacity is 40,000 tons, accounting for approximately 66% of the global total.
China Merchants Securities believes that this accident caused force majeure.The global supply of vitamin A and vitamin E will drop significantly, and there will be a significant gap between supply and demand.
Low-price goods are hard to find
Manufacturers would rather breach the contract than cancel the order?
According to a report by Securities Times e Company on August 8, an industry researcher told reporters:The impact on the industry exceeds market expectations!Judging from the latest notification, there is no hope for resuming production in the short term, which will have a significant impact on the supply of related vitamin products.”
"It will be even harder to find the goods!"On the evening of August 7, after seeing the news of BASF's supply cut, a large vitamin distributor in East China told e Company reporters:"There is no doubt that the prices of VA, VE and other products will continue to rise sharply."It is worth mentioning that on the eve of BASF's official announcement of supply suspension (August 6), the above-mentioned distributors had already felt the market's reluctance to sell and complained bitterly during an interview with reporters:"Now, the contract is like a piece of waste paper. The manufacturer finds all kinds of reasons not to ship the goods. Even if you pay, you can't get the goods."
It is understood that the above vitamin distributor originally signed a contract with a domestic vitamin manufacturer for about 50 tons, and the contract price was 92 yuan/kg.The manufacturer's account manager has verbally notified us that either the order must be cancelled and the manufacturer must pay liquidated damages, or delivery must be delayed.
For example,According to the manufacturer, the 10% compensation for the 50-ton VA supply contract is 460,000 yuan in liquidated damages. However, in the current VA market, some transaction prices have reached more than 200 yuan per kilogram. Even if the manufacturer pays 460,000 yuan in liquidated damages, it can still make more than 4.2 million yuan."If the price rises to 300-500 yuan per kilogram, their breach of contract cost will be even lower."
Screenshot from Baichuan Yingfu
On August 7, the reporter also learned from multiple channels that a well-known domestic vitamin manufacturer has recently re-quoted its prices. Before the accident, the company's VA and VE prices were based on market conditions, at 90-95 yuan per kilogram.At present, the price of VA has reached 320 yuan/kg, and the price of VE has reached 150 yuan/kg. Among them, the price of VA has increased by 237%-256%.
According to China Securities Journal, on August 8, Baichuan Yingfu released the latest news showing thatMainstream vitamin A manufacturers stop selling in the domestic marketSign stopMost traders do not quote prices.Some reference order prices have risen to 190-220 yuan per kilogram.Low-priced goods are hard to find.Some sellers who are reluctant to sell have raised their quotes to more than 220 yuan/kg, and the overall transaction of new orders remains to be seen; mainstream vitamin E manufacturers have stopped signing and reporting in the domestic market, and most traders in the market also do not quote. Some reference prices have risen to 135 yuan-145 yuan/kg. Low-priced sources are hard to find, and some sellers have raised their quotes to 150 yuan-160 yuan/kg. The overall transaction of new orders remains to be seen.
BASF's first-half performance is poor
Three days before the July 29 accident, BASF released its first half performance data.BASF's sales in the second quarter of 2024 were 16.1 billion euros, down 1.2 billion euros from the same period last year.
BASF said the main reason for the decline in sales was the price drop in all business areas, especially in the surface treatment technology business area. Unfavorable exchange rate factors and slight asset portfolio effects also led to a decline in sales to a certain extent. A slight increase in sales had a positive impact on sales. Sales in the industrial solutions, chemicals, nutrition and care, and materials business areas all increased, compensating for the decline in sales in the surface treatment technology and agricultural solutions business areas.
In addition, in the first half of 2024, BASF's cash flow from operating activities was 1.4 billion euros, an increase of 275 million euros from the same period last year. Free cash flow was -986 million euros, compared with -977 million euros in the first half of 2023.
According to Dirk Elvermann, BASF’s Chief Financial Officer,BASF is implementing a cost reduction plan.“We are on track to achieve our target of 2.1 billion euros in annual cost savings by the end of 2026.”
Source: Shanghai Securities News, China Securities Network, Securities Times, News Square, Chengshi Interactive, China Securities Journal, China Business News, 21st Century Business Herald
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