BASF Inaugurates Landmark €8.7 Billion Verbund Site in China, Solidifying Global Strategy

ZHANJIANG, Guangdong Province, China – German chemical giant BASF today officially inaugurated its colossal Zhanjiang Verbund site in southern China, a sprawling complex representing the company's largest single investment to date. With an investment totaling approximately €8.7 billion, the new site is a pivotal move in BASF's global strategy, aiming to bolster its presence in the world's largest chemical market while setting new benchmarks for sustainable production.

The inauguration ceremony on March 26, 2026, marked a significant milestone, drawing representatives from government, customers, and business partners. This state-of-the-art facility, covering an area of about four square kilometers, is BASF's seventh Verbund site globally and its third largest, following its established complexes in Ludwigshafen, Germany, and Antwerp, Belgium.

A Strategic Investment in Asia's Chemical Hub

The decision to construct the Zhanjiang Verbund site, first announced in 2018 with construction commencing in 2019, underscores BASF's long-term commitment to the Chinese market. China currently accounts for roughly half of global chemical demand, yet historically, only about 14% of BASF's global revenue has originated from the region. This new complex is designed to address that imbalance, with the majority of its diversified product portfolio—ranging from basic chemicals and intermediates to specialty chemicals for various industries—intended to directly serve customers within China. The "local-for-local" approach aims to strengthen BASF's market position and is expected to increase the proportion of sales in China to between 15% and 20%.

The site's strategic location in Zhanjiang, Guangdong Province, provides enhanced access to one of China's most economically dynamic regions, where many of BASF's key customers are situated. This direct engagement with the local market aligns with the company's "Winning Ways" strategy, as articulated by BASF CEO Dr. Markus Kamieth.

Engineering for Efficiency and Sustainability

Central to the Zhanjiang Verbund site is its innovative Verbund concept, which integrates production processes to optimize resource utilization and minimize waste. A cornerstone of the complex is a steam cracker with an annual ethylene capacity of 1 million tons. This cracker is notable as the world's first to feature main compressors powered entirely by renewable energy, utilizing e-drives. Furthermore, it is a flex-feed cracker, capable of processing various feedstocks, including naphtha and butane, providing operational flexibility and resilience against supply chain fluctuations.

Sustainability is a key pillar of the Zhanjiang project. The site is projected to reduce CO2 emissions by up to 50% compared to a conventional petrochemical facility. This ambitious goal is supported by long-term green power agreements and an investment in an offshore wind farm, ensuring a 100% renewable electricity supply for the entire site. These efforts position the Zhanjiang Verbund site as a global role model for sustainable chemical production, demonstrating BASF's commitment to decarbonization and greener value chains.

Phased Development and Broad Product Portfolio

The journey to full operation has been a multi-year endeavor. The initial production plants, focusing on engineering plastics, began operations in 2022, followed by a plant for thermoplastic polyurethanes (TPU) in 2024. By late 2025 and early 2026, BASF successfully launched its first value chains within the Verbund and rapidly ramped up the steam cracker. The site currently employs over 2,000 people and is set to produce a diverse range of chemicals catering to the transportation, consumer goods, electronics, home care, and personal care industries. The project was completed on schedule and notably, below its original budget, reflecting efficient execution.

Navigating Market Dynamics and Future Outlook

While the inauguration marks a triumphant engineering and logistical achievement, BASF acknowledges the challenging market landscape into which the Zhanjiang site is expanding. The current chemical market is characterized by oversupply, intense price competition, and historically low margins. CEO Dr. Markus Kamieth has openly stated that the profitability of the investment in its early years will be "significantly below what we had originally envisioned." However, he expressed confidence in an improved operating environment for the chemical sector in China over the next two to four years.

The investment has also drawn scrutiny regarding geopolitical risks, particularly given global discussions around strategic dependencies on China. Despite these concerns, BASF maintains that expanding in China is essential to leverage growth opportunities and serve its customers effectively. The company's resilience is partly attributed to the flexible feedstock capabilities of its new cracker, offering more options than older, purely naphtha-based facilities in the region.

The Zhanjiang Verbund site stands as a testament to BASF's long-term vision and its determination to innovate within the global chemical industry. It represents not only a substantial financial commitment but also a strategic move to integrate advanced technology and sustainability into its core operations, positioning BASF for future growth in a critical market, despite current headwinds.