BASF Faces Prolonged Shut Down At Ludwigshafen After Explosion

BASF faces prolonged shut down at Ludwigshafen after explosion

19-Oct-16

BASF SE faces a prolonged shut-down of production units at Ludwigshafen, Germany, where a deadly explosion and fire killed two employees and injured dozens, as per Bloomberg. The German manufacturer said two steam crackers at the installation remain halted and another 20 facilities are either stopped or only partially working. Crackers are the starting point for producing basic chemicals that go into everything from insulation materials to solvents.

In addition to the casualties, who were both firefighters, BASF said one person is still missing after blasts Monday at the sprawling site at Ludwigshafen, a town on the banks of the Rhine River where the company has its headquarters and biggest plant. 8 of the 17 were seriously injured in the fire that took more than 12 hours to extinguish. The explosion is a setback for the world’s biggest chemicals maker, which has sought to reduce the number of accidents on site, revising goals for safety and health in 2015.
While German prosecutors and police in Ludwigshafen plan to carry out an investigation into the explosion, an extended shutdown of manufacturing capacity could also crimp earnings just as the company last week announced an uptick in demand for specialty chemicals. Closing of the two steam crackers will mainly impact the company’s basic chemicals division, which makes up about 21% of sales and about 30% of earnings before interest, taxes, depreciation and amortization, Mayer said. The analyst estimates that 6% of BASF’s annual earnings might be directly impacted by the fire, with as much as 3% of Ebitda at risk because the shutdown may last more than a quarter. A prolonged shutdown may tighten European ethylene markets in 2017, benefiting Dow Chemical Co. and LyondellBasell Industries NV, Nomura analyst Aleksey Yefremov said in a note to clients. The North Harbor, where the explosion took place, is a terminal for combustible fluids such as naphtha, methanol and compressed liquefied gases. More than 2.6 million tons of goods are handled there each year, and an average seven ships a day moor at its docks, according to BASF’s website. It is one of three ports BASF operates at the Ludwigshafen site.