The Urethane Blog

BASF Urethane Comments from Investors’ Call

BASF SE (BASFY) Management on Q2 2019 Results – Earnings Call Transcript


Martin Bruderm├╝ller


This slide now illustrates the sharp price corrections in TDI, shown in red, and MDI, shown in blue, after hitting record levels at the beginning of 2018. We highlighted at that time already that such margin levels could not be sustained. Waning demand across several downstream sectors, especially transportation and industrial, contributed to the negative market sentiment. A temporary upwards price momentum in Asia at the end of April was short-lived and faded after the trade conflicts escalated in May and June.

As a consequence and due to the slowdown in global economic growth and industrial production, we adjusted our macroeconomic assumptions for the full year. We have reduced our 2019 growth expectation significantly for global industrial production and for global chemical production, both from 2.7% to around 1.5%. The automotive industry, an important customer industry for BASF, is no longer expected to grow in 2019. Growth in the second half compared to the prior year period is projected to stay negative. We thus expect a global volume decline of minus 4.5% in the full year. Customers in all industries are now very cautious with projections in these times. Our visibility on demand development is currently very low. The previously assumed acceleration in the second half will not happen.

For the time being, we expect low margins in our isocyanates and cracker products business to persist.