The Urethane Blog
June 10, 2026
Regulatory costs jump 40% in five years driving up housing costs
By Larry Adams
June 9, 2026 | 9:18 am CDT
WASHINGTON – A new study by the National Association of Home Builders (NAHB) finds that regulations at the federal, state and local levels add $131,734 to the cost of a new single-family home—26.4% of the average sales price of $499,500 as of January 2026.
Breaking down the total regulatory costs further, the study revealed that $84,939 of the final house price is the result of costs incurred by the builder due to regulation during the construction phase of the home while $46,795 is attributable to regulation during land development.
“This study illustrates how excessive regulation is deepening the nation’s housing affordability crisis and making it harder for builders to deliver the affordable, attainable housing that our nation sorely needs,” said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “Policymakers should remove unnecessary and costly regulations that are pricing buyers out of the market and slowing construction of new homes and apartments.”
Although the share of regulation in the land development phase fell from 10.5% in 2021 to 9.4% in 2026, the construction phase increased by nearly four percentage points, rising from 13.3% to 17.0%, largely because of higher building permit fees and changes to building codes over the past decade. Based on U.S. Census home price data, regulatory costs for the average new home increased from $93,870 in 2021 to $131,734 in 2026—an increase of more than 40% in about five years.
Over the same period, U.S. disposable income rose just 18.3%, meaning that regulatory costs are increasing more than twice as fast as consumers’ ability to pay.
June 9, 2026
China PU Market Reset: War Premium Fades, Demand Pressure Builds
June 5, 2026 7 min read
The Middle East crisis reshaped global polyurethane feedstock trade flows in a short period of time. Low-cost Middle Eastern supply became less available, European producers faced higher cost pressure and reduced competitiveness in import markets, North American markets experienced feedstock tightness and price increases, while South Korea and Japan also faced upstream and logistics constraints before gradually moving back toward some stability. During this disruption, China’s PU feedstock supply became even more important for import-dependent markets globally.
By early June, however, the market has entered a new phase. The war premium that pushed TDI, PMDI and Polyether Polyols prices higher in March and April has largely faded. China domestic prices have corrected sharply, with TDI already back near February levels, PMDI moving quickly toward its pre-crisis range, and flexible slabstock polyol already at February levels. Some war-related factors have not fully disappeared, logistics costs remain elevated, recent 20ft container indications are still around USD 3,000–4,000, and shipment delays or uncertainty may persist in June as there has been no clear ceasefire or peace agreement signed. Even so, pricing is now being driven more by weak domestic demand in China, soft overseas downstream demand, healthy inventories in export markets, production costs, operating rates and margin discipline than by supply panic.
This makes China’s current price reset especially important. As the world’s largest and most influential PU feedstock supplier, China’s domestic price movement is now a key signal for regional and global import markets. The central question is no longer whether the crisis pushed prices higher, it already did. The more important question is whether demand recovery and inventory digestion can stabilize prices before producer margins come under deeper pressure.
Price Reset Toward Pre-Crisis Levels
The price correction in May and early June has been significant across all three major PU feedstocks. TDI has already returned to around February levels. PMDI remains slightly above its February average, but the pace of decline suggests that it may also approach the pre-crisis range soon. Flexible slabstock polyol has already reached February levels, with margins becoming extremely tight for some suppliers.
China PU Feedstock Price Trend and Reset | 5 Feb – 5 June (CNY/Tonne)
Note: Prices mentioned are East China DEL domestic prices, including 13% VAT; TDI/PMDI on drum basis, flexible slabstock polyol on bulk basis. USD equivalents use the June 5 exchange rate: 1 USD = 6.77 CNY.
TDI: Back to February, Still Under Pressure
TDI has already returned to around February price levels. Current China domestic TDI prices are around CNY 14,300–14,900/MT (USD 2,110–2,200/MT). Production cost is estimated at CNY 12,000–12,200/MT (USD 1,770–1,800/MT), leaving current margins around CNY 2,500–2,700/MT (USD 370–400/MT).
Normally, a return to February levels would suggest that the crisis impact has largely disappeared from pricing. However, TDI prices are still under pressure because demand has not recovered strongly. China exported large TDI volumes during the crisis period, especially when overseas buyers were trying to secure supply amid uncertainty. Those shipments helped import markets, but they also created healthier inventory positions downstream. As a result, many buyers are now less aggressive in May and early June.
The key issue is that prices are no longer falling because of the crisis; they are falling because demand remains weak. If downstream consumption does not improve, TDI margins may continue to compress in the near term. Stabilization may only become more likely in the second half of June, when inventory levels begin to decline and July shipment demand becomes clearer.
PMDI: Fast Correction, Higher Cost Base
PMDI is also correcting sharply, although it has not fully returned to February levels yet. The current average price is around CNY 15,650/MT (USD 2,310/MT), compared with a February average of about CNY 14,200/MT (USD 2,095/MT). Based on the recent decline of around CNY 1,000/MT per week, PMDI could move closer to the pre-crisis range if the current trend continues.
The important difference is cost. Current PMDI production cost is around CNY 12,150/MT (USD 1,795/MT), compared with about CNY 10,430/MT (USD 1,540/MT) in February. This means the market price is moving back toward pre-crisis levels, but the cost base remains higher than before. Current margins are still around CNY 3,500–4,000/MT (USD 520–590/MT), but continued price correction could reduce this buffer quickly.
This makes PMDI a transition market. The war-driven price premium is fading, but production economics are not fully back to February conditions. If demand remains weak and buyers continue to delay procurement, prices may keep moving lower. However, the higher cost base may eventually slow the decline, especially if producers become more disciplined on offers and operating rates.
Polyether Polyols: Tight Margins Limit Further Downside
Flexible slabstock polyol in domestic market has already returned to around February levels, with the current bulk price averaging about CNY 8,350/MT (USD 1,235/MT). Unlike TDI and PMDI, the polyol market has very limited room for further downside because margins are already extremely tight. Some suppliers are close to breakeven, while others may already be facing losses depending on feedstock costs and plant efficiency.
The weakness is mainly demand-driven, but export economics are also adding pressure. The cancellation of Polyether Polyols export tax rebate has tightened export profit margins, keeping export offers relatively firmer than February levels even as domestic offers have already returned to pre-war levels. This gap is making overseas buyers more cautious, especially when many downstream users are still digesting March–April cargoes.
Large export volumes in March and April helped overseas markets build inventory, especially when buyers were reacting to the risk of prolonged supply disruption and policy-related cost changes. Demand is unlikely to recover strongly before late June unless inventories fall faster than expected. Suppliers are already operating at reduced rates, with current operating rates around 50% in some cases. If demand remains weak, further production cuts may become more important than additional price reductions. For Polyether Polyols, the market adjustment is likely to shift from price competition to supply discipline.
Export Inventory and Weak Demand Pressure
The March–April export wave is now one of the main reasons why the market remains weak even after prices have returned close to pre-crisis levels. China exported large volumes of PU feedstocks during the two-month crisis period, including 132,770 MT of TDI, 170,964 MT of PMDI and 611,818 MT of Polyether Polyols. These volumes mainly flowed into major consuming regions such as Southeast Asia, South Asia, South America, Turkey, Europe and Africa, where buyers had moved earlier to secure supply amid uncertainty over Middle East availability, logistics delays and rising prices.
This export data only reflects China’s shipments. In reality, many of these same consuming markets also imported from other available regions, including South Korea, Thailand, Singapore, Europe and other suppliers where material was available. Taken together, China’s strong export flow and additional regional sourcing helped downstream buyers build healthier inventories during March and April. That inventory position is now one of the key reasons why May–June demand has weakened: buyers are not absent, but many are covered, cautious and waiting for clearer price signals before restocking.
Freight remains higher than normal and shipment uncertainty still matters for importers, but these factors are no longer strong enough to offset weak demand pressure. Domestic demand in China is also not strong enough to absorb supply quickly, while overseas downstream buyers are still digesting inventory. As a result, both domestic and export offers remain under pressure, and the market is increasingly being driven by inventory digestion rather than supply panic.
China PU Feedstock Exports | March–April (Unit: Tonnes)
| Product | Total Exports (March–April) | Top destination markets |
| TDI | 132,770 | Southeast Asia, Europe, South America, South Asia, Africa |
| PMDI | 170,964 | Europe, Southeast Asia, South Asia, South America, Africa |
| Polyols | 611,818 | Europe, Southeast Asia, South Asia, South America, Africa |
Source: China Customs
What Comes Next: Demand Recovery or Further Market Pressure?
The near-term direction depends on whether demand recovery can catch up with the pace of price correction. For TDI, prices are already back near February levels, but weak demand could still squeeze margins further in early to mid-June. For PMDI, prices may continue moving toward the pre-war range, but higher production costs could eventually limit the depth of the correction. For Polyether Polyols, further price downside appears limited because margins are already very tight.
The second half of June will be an important turning point. If downstream inventories decline and July shipment demand improves, prices may begin to stabilize. If demand remains weak, producers may need to manage the market through lower operating rates rather than deeper price cuts, especially in Polyether Polyols and eventually in Isocyanates if margins continue to compress.
Overall, China’s PU feedstock market has moved from crisis-driven price inflation to demand-driven price correction. The war premium has largely faded, although elevated freight, shipment delays and geopolitical uncertainty still remain secondary risk factors. The next stage will be defined mainly by domestic demand weakness, export-market inventory digestion, downstream restocking, production cost pressure and producer discipline. China remains the key supply signal, and its price reset will continue to shape regional PU feedstock pricing in near to medium term.
https://www.pudaily.com/news/65022/china-pu-market-reset-war-premium-fades-demand-pressure-builds
June 8, 2026
Zhanjiang Verbund Site Launch and Strategic Investment in China Transcript
Jun 08, 2026, 1:28 PM ETBASF SE (BASFY) Stock, BFFAF Stock
BASF SE (BASFY) Discusses Zhanjiang Verbund Site Launch and Strategic Investment in China June 8, 2026 6:00 AM EDT
Company Participants
Stefanie Wettberg – Senior Vice President of Investor Relations
Markus Kamieth – CEO & Chairman of the Board of Executive Directors
Haryono Lim
Stephan Kothrade – CTO & Member of the Board of Executive Directors
Markus Kamieth
CEO & Chairman of the Board of Executive Directors
Yes. Thank you very much, Stefie, and welcome, everybody, to our deep dive on Zhanjiang, a topic that we all have talked about a lot over the last year. So I’m really happy to have a bit of time with you to answer your questions and also introduce the site to you.
We have recently opened Zhanjiang as our seventh Verbund site in BASF globally. And this is the first Verbund site opening since 2005, where we opened the last one in Nanjing, and we’ll talk about this in a second. It is — the Zhanjiang investment marks BASF’s largest single investment globally in our history and the largest investment by a German company in China. At the peak of construction, more than 35,000 people from over 150 companies worked at the site. And as Stefie said, we completed the project on schedule below the original budget and started up the project in line with our expectations.
Now let me take you back a little bit to the history of BASF in China. And BASF has a long history of over 140 years of doing business in China. And we started actually our production in China in 1969 with our first manufacturing site, and that was roughly the time when we started up our — when we opened our Antwerp site in Europe. So we are certainly one of the longest invested chemical companies in China.
Since then, we have consistently increased our presence in Greater China, in line with our local-for-local approach, which we follow already for quite some decades. In 2025, the proportion of sales from local production in Greater China accounted to almost — to around 80%. And we sourced around 90% of the required input factors locally. Today, BASF operates 29 production sites and has 28 major wholly owned companies, and we are partnering in 12 major joint ventures in the country.
Overall, 12,500 employees helped to generate sales of EUR 8.2 billion with customers in Greater China. And please keep in mind that this number EUR 8.2 billion does not include the roughly EUR 2 billion of sales generated by our main joint venture in China, BASF-YPC Company, which is a 50-50 joint venture with Sinopec operating our Nanjing Verbund site, and we consolidate or we account for this participation at equity. So the EUR 8.2 billion sales number does not account for this.
On the slide, you can also see that we have consistently delivered volume and earnings growth in Greater China between 2015 and 2025, so roughly over the last 10 years, sales volumes in Greater China have grown at 6% on a compounded average annual basis and profitability as measured by EBITDA before special items has grown on average 11% per year, and the performance has been stronger than in any other region for BASF.
Now let me turn for a moment to the macroeconomic environment in China’s role in the chemical industry. We overall assume that the chemical production globally will grow at a rate of around 2.8% on per year in the time frame of 2025 to 2030. This growth will be predominantly driven by Greater China, which is expected to grow by 3.7% per year. And if you look at the middle of this chart, I think these are some remarkable numbers. If you look at the share of Greater China’s — of Greater China in the GDP, industrial and chemicals growth. You can see that 1/3 of the global GDP growth, roughly half of global industrial growth and 3/4 of global chemicals demand growth will come from Greater China in this time period.
This growth will be supported by robust domestic demand based on an expanding middle class with rising income and through export-oriented industries. Greater China will — is and will remain the largest chemical market in the world. And already today, accounts for 55% of global chemical production. So I think it’s important for the chemical industry cannot be over exaggerated.
On the next slide, you can see that the absolute growth, if you take this from a relative to an absolute growth perspective, the absolute growth in the chemical market in Greater China is expected to be nearly 3x higher than the rest of the world combined. All other regions will grow as well, at least to our estimates in the time frame, 2025 to 2030. And I think it’s fair to say when you look at these numbers that the growth in China, certainly, will be unmatched by anything else that we see in the rest of the world. And this is why we have decided to invest into a second Verbund site in China.
Now the overall environment also politically is certainly providing us with some confidence that also the next years will be quite successful years for BASF. If you look at the political environment that comes through China’s 15th 5-year plan, you can see that this creates a very favorable framework for companies like BASF. Our local scale, cost competitiveness and especially our innovation strength, foster long-term value creation. In addition, our broad portfolio means that we can grow by creating tailored solutions for our customers.
And we today talk about the big manufacturing site, but let me also remind you that in Shanghai, with our innovation campus, we have over the last 10 years, established a significant. And our second largest innovation center globally for our chemicals activities in China and this in line with our — or in combination with our strong EHS reputation certainly gives us a strong credibility to develop future solutions for our customers in China.
Our strong commitment to sustainability supports the targeted transition of the Chinese economy to a low-carbon and circular economy. And in this regard, the Zhanjiang Verbund site shows what the future of chemistry will look like is a smart integrated Verbund structure on an industrial scale, efficient digital and sustainable by design, and you will see this in more details going forward.
Lastly, let me focus on the location and why we chose to invest this Verbund site in the south of China, namely in the province of Guangdong. Historically, BASF has grown significantly in the east of China. So we had more than 90% of our assets in the area around Shanghai and Jiangsu province. More and more China’s economic growth has moved south and Guangdong is actually as a province today, the powerhouse of the Chinese economy. With nearly 128 million residents, Guangdong is the most populous province in China. And although in terms of GDP, it is the country’s largest province with Jiangsu province, which is home to our Nanjing operations ranking second.
And to put things into perspective, the GDP of Guangdong is roughly equivalent to that of South Korea or Spain. The projected GDP growth of around 4% per year in Guangdong will be driven by industrial investments of important BASF customer industries, such as transportation, consumer goods, home and personal care as well as electronics. And it includes, of course, the strongly growing, let’s say, area or economic zone around the Pearl River Delta, including Macao and Hong Kong.
In a nutshell, Guangdong Province is one of the most — is one of the economic growth engines of China and detects as a powerhouse for BASF’s key customer industries and provides fast-growing demand innovative chemical products and solutions. And until today, Guangdong as a province is a significant net importer of chemical products, and we assume that the strong economic growth in the Guangxi, Guangdong, Fujian and Hainan provinces will at the end of the day, stipulate a strong and successful future of our Verbund site in Zhanjiang.
And with this, I hand over to Hary, and please take us into the journey of the Zhanjiang site.
Haryono Lim
Yes. Thank you very much, Markus. Let me virtually bring you to Zhanjiang and explain to you a little bit about what is so special about the location, Zhanjiang. So the location is exactly on this Donghai Island. This is over excellent geographical advantages. I think thanks to proximity fast-growing industrial centers in Guangdong and the surrounding provinces in South China.
For those of you who have never been to Zhanjiang, so we are located on the western part of Province Guangdong. And today, you can reach us via high-speed rail train from Guangzhou just in 1.5 hours. So our site has direct access to the deep-water seaport. I think this is very important to us to run the Verbund because with the access to the deep seaport and operate our own JP, we are able to bring in large-scale raw material and as well as using the waterway to ship our finished goods to our customers. And the location itself also offers the shortest sea routes between Mainland China and the Southeast Asia market. And in addition, Zhanjiang has a rapidly evolving industrial ecosystem, enabling future synergies with co-location partners and core producers.
Next, I would like to give you some statistic about our site in Zhanjiang. So impressive statistic here. We have a size of full square kilometers, so 400 hectares since we are approaching the World Cup. So it is roughly 550 soccer fields just for you to compare to the soccer field. And as Stefie mentioned at the beginning, in early 2026, we have successfully started up our entire Verbund, including the worldscale flex-feed steam cracker. And as of May, we have started producing and also run successfully 19 of our plants and 33 production lines. And one more plant is coming, and this will be commissioned in 2028. This is the 3-decanol plant. So this is also on schedule. The total investment, as you know, it is an amount of EUR 8.7 million. This is the CapEx that we spend on the period of 2019 to 2028.
And as for the value chain. So we have this Verbund location with the upstream and downstream. So that gives us an advantage to also to manufacture a broad product portfolio. It is not just the cracker or cracker plus 1. We call it, The Cracker Downstream, but we have more products to offer through the integrated approach. We create a value chain for ethylene, propylene, C4.
And after Ludwigshafen and Antwerp Zhanjiang is the third largest Verbund for BASF. And today, we are employing around 2,000 people working at a site as a key platform for the long-term profitable and sustainable growth of BASF in China and Asia, the majority of the products that we produce in Zhanjiang will directly serve customers in China, particularly. And this is fully aligned with BASF local-for-local production approach.
And allow me also to share some key success factors for our Zhanjiang Verbund site. So running such a mega project require high commitment to safety, quality and also compliance. At the peak of our construction site, we have more than 35,000 people working for BASF and more than 150 companies working at our site. So it is UTmost important that we are committed to the safety and the quality of our site, making sure that not only the BASF employees, but also all our partners, they are giving us the same commitment as well.
And also, this is important to make sure that we have a very, very strict discipline in our executions, making sure that the timeline and as well as the CapEx are well under control. And what is also important for us for being a greenfield in China that we are also managing the interfaces with authority [indiscernible] partners extremely well, making sure that any issues that we have identified are also being addressed speedily. And of course, at the end, it is also about the people. So we are very proud that our team has executed this complex tasks with outstanding dedications and speed and exceptional level of commitment.
So this is just a couple of points that I want to highlight to you that summarize what we see as a key pillar for success. And also important is that we have started the recruitment processes very early at the beginning of our project, knowing that to get the right people and to train them and to qualify them to run such an important Verbund for BASF that requires time and also sufficient training for our stuff. But we are fortunate enough that in China, we are operating many sites, especially with our experience in Nanjing, our Verbund site in Nanjing, we are able also to train our colleagues in various production sites in China as well.
So — and I think also what is impressive for us to make a comment here is also about the commissioning and start-up as well. I think running a Verbund is always a complex part. It has a chance if it works. But at the same time, we know that if anything doesn’t fall into phases, may also create a lot of complexity and stress. So I think we are very happy to see that with our comprehensive commissioning plan, so we are able to start up our plants in sequences and achieve steady state operation already today.
So the next slide that I want to introduce to you is also about our Smart Verbund. So this is also a very unique opportunity for BASF for being a greenfield that we are able to bring our vision to life that with the digitalization and innovations, we are able to even get additional synergies, what already the Verbund could deliver. So we apply state-of-the-art digital solutions that are seamlessly integrated and enhanced with big data and artificial intelligence.
To achieve this, we implemented a best-in-class digital infrastructure and are leveraging 5G and cloud services, for example. And also to make this more tangible also, let me have some showcase for some features. So we are trying for our Verbund site to be paperless. We have implemented fully automated real-time integrations, and we have more than 8,000 utility measurements. We have AI-driven automations. If you see today in our site logistics, AI agents already automate 95% of our outbound delivery processes across multiple systems. And also with the help of digitalization. So we are moving from reactive to proactive, digital assistant leverages DSF data, analytics and AI to spot supply disruptions at early stage.
With all that, our Smart Verbund vision has become reality, something that is fascinating for me also as a chemical engineers. But based on this excellent foundation, we will continue to innovate. We are at the right place in China where today, AI, automation, robotics are very much on the front page of our activities. And here, we hope that we will continue making use of this opportunity to drive our Verbund even to more sustainable operation.
The next slide is about our unique cracker setup. Here, I would like to highlight that with the access of the deep seaport that we have, we are able also to bring the key cracker feedstock to our site. But also what is important to highlight here is that in Zhanjiang with our 1 million metric ton of ethylene flex-feed cracker we are able to process quite broad varieties of feedstock like naphtha and butane. And this will allow us to produce key raw material for our value chain, ethylene, propylene, Crude C4 reliably and efficiently.
Furthermore, this setup also allow us to optimize feedstock and to strive to achieve low cost. It is remarkable also that we are driving or utilizing 100% renewable energy today for our entire site. And one big contributor to this success is also the innovation that we apply here for our cracker that we drive the main compressor of our cracker also known as a e-drive, using 100% renewable energy. In conventional cracker, typically, those big compressor turbines are driven by steam generated and using the natural gas and cracker fuel gas.
And also, we make use of the surplus cracker fuel gas and CO2 off-gas produced by downstream plant like ethylene oxide. We are using those fuel gas and CO2 off-gas to produce our syngas, which is again important raw material for our downstream like for the Oxo alcohol. And not only just the — utilizing the e-drives, but we also make sure that the so-called heat integration of our entire site is really at the top notch because with the heat integration, we are able to optimize further our site and reduce the CO2 and therefore, less fossil feedstock to be used compared to other sites.
The next one, I want to give you a little bit of our sustainability journey here in Zhanjiang, especially also to explain to you how we’re able to bring our carbon footprint or reduce our carbon footprint more than half than conventional petrochemical side. So with the Verbund concept, obviously, we have already efficiencies. And what I mentioned before about the heat integrations. So that obviously also contributed to the lower use of the fossil fuel.
And with the e-drive using the 100% of renewable energy for the entire site, obviously, this is all contribute to bring down the CO2 emissions for our site. And how are we able to do that? I think to secure the renewable energies today, we have 3 main sources. One is we have a joint venture with Mingyang for offshore wind farm located 80 kilometers south of Zhanjiang. This is currently under construction and has a planned capacity of 500-megawatt.
And then we have also — the second source is from the Power Purchase Agreement that we have signed with partners like State Power Investment Corporation, SPIC, and GEDI. This is a long-term supply contract for 25 years. And the third one is we also install wherever we can on our site, the solar panels that contribute also to the green energy source for our site.
With this, I would like to hand it over to Stephan.
Stephan Kothrade
CTO & Member of the Board of Executive Directors
Yes. Thank you very much, Hary. I would like to continue with an overview of the value chains and products of the Zhanjiang Verbund site to illustrate a little bit what the differences are between our site and the typical big sites you see in China from our competitors.
First of all, you know we have this Verbund setup, our Verbund production system that makes us more resilient because it’s also less dependent on externally sourced precursors as we produce the vast majority ourselves. It provides us with cost advantages. But it’s also important to highlight here that whilst most of our competitors focus just on 2, 3, 4 major commodity type products such as polyolefins, ethylene glycol or PTA, we have a very diversified product slate here.
Of course, we also produce polyethylene and ethylene glycol. We need these products as scale enablers to achieve economies of scale and cost benefits and also to have more flexibility. But let’s say, the strategically relevant products are more diverse. And let me go through the 3 main value chains, starting with C2, ethylene. So ethylene oxide is a very important raw material for us because we produce surfactants and even precursors for brake fluids on our site.
Last year, during the investor update in Antwerp, we showcased the BASF EO Value Chain just to repeat a little bit. So we are a technology leader and also offer the lowest CO2 footprint with our downstream products because of lower energy consumption and high raw material yield. We also have the best safety technology in the industry. So this is a very strong foundation of this value chain.
When we come to the propylene C3 value chain, this is the basis for our acrylics business, acrylic acid and Oxo alcohols. And these are used to make further products, mainly for the adhesives and coatings industry. And Oxo products are also the feedstock for Specialty Intermediates. One byproduct is isobutyraldehyde that is a basis for neopentyl glycol, an intermediate that I will talk about in a couple of minutes.
And when it comes to the Crude C4 that we get out of our cracker, here, we extract isobutene, which is the starting point of the citral value chain to produce aroma ingredients and vitamins. Now in addition, we also have at the site engineering plastics compounding facilities and plant for thermoplastic polyurethanes, which both serve the automotive and electrical industries in South China, but are also used for sports shoes and sports equipment.
Now building on this product slate, I would like to show you on the next few slides some examples of customer success stories that show how our local-for-local production approach and the breadth of our customer industries works and plays into our hands. And here, it’s also very important to notice what Markus has highlighted that we have a strong R&D footprint in China at our Shanghai campus that allows us to co-create with customers.
And let me start with one example, the partnership with Youyi. You are all familiar, of course, with adhesive tapes from your daily life, but I would bet it most of you haven’t heard a name Youyi. It’s definitely not a household name, but Youyi is a globally leading adhesive tape manufacturer that operates around 20 production sites in China and has a very strong market presence. It’s a vertically integrated player from polypropylene film to the finished tape products. And they are a — have been a partner for us for many, many years. Actually, we started our business with them from our Nanjing Verbund site and now with the Zhanjiang Verbund site in Guangdong. We also follow the production footprint of Youyi because they also build a new large-scale production plant in South China, not far from our Zhanjiang Verbund site.
So from a customer perspective, we offer here a long-term reliable acrylates supply. We talk about butyl acrylate and 2-ethylhexyl acrylate and we reduced the import dependency in South China for these products. And with our leading cost position in acrylics, thanks to our proprietary BASF technology and the favorable cost position offered by the site set up, we are here the partner of choice. So this customer alone purchases the production volumes equivalent to one world-scale butyl acrylate plant every year. And our Zhanjiang Verbund supplies more than 50% of its BA and 2-EHA production to China’s fast-growing adhesives and the tape market, which has a compounded annual growth rate of around 11%. So this was an example from our Petrochemicals division.
Let’s move on to the Intermediates division. And here, we have a success story around neopentyl gycol or NPG that I mentioned already. It’s a key ingredient for powder coatings that are low VOC, low volatile organic compound coatings for a wide variety of applications. ranging from garden furniture to infrastructure elements, for instance, all the big construction parts you see at airports are typically coated with powder coatings.
To capture profitable growth, we have also built a world-scale NPG plant at the Zhanjiang Verbund site. NPG is expected to grow at around 5% per year on a global scale and Asia Pacific is by far the largest market, and it’s also the fastest-growing region with an annual growth rate of around 6%. And now we are again close to our customer. Here, the company KHUA, it’s one of the top ranking producers of the saturated polyester resins that are made with NPG and then used for powder coatings. And we signed an agreement with them to supply them from our new plant.
And again, here, we have the same pattern. We have been, for many years, a strong partner based on our production in Zhanjiang, at the Zhanjiang Verbund site, and now we replicate the success and tap into the market potential in South China. To give you just a number, KHUA recently expanded its production capacity by 150,000 tonnes to almost 400,000 tonnes. So quite a relevant customer for us.
Now we talk about Ultramid and Ultradur, our engineering plastics based on polyamide and PBT. And here, It’s, again, relevant to emphasize the co-creation aspect, co-creation in innovation with customers from our Innovation Campus in Shanghai. We are the — we hold the #1 position in engineering plastics globally, Asia Pacific continues to be our largest and fastest-growing market. And for us, it’s important to penetrate new application segments through innovation. And here, the company Orient Motion, a very dynamic, fast-growing mobility tech start-up from Suzhou in China is a nice example because they are specializing in the next generation by wire systems that replace traditional mechanical components in the automotive industry with electronic control. And we have co-developed here a break by wire pedal system.
You see the pedal on the upper left corner on the slide, on the right side, you see the control units where the mechanical signal is translated, transmitted into an electric signal. So our materials are nonconductive, lightweight, antistatic. It’s about stiffness, mechanical properties, and you have to meet all the sophisticated GB codes. And we developed this system now together with Orient Motion within less than 2 years and brought it now as the first mass-produced electromechanical braking system to the market, benefiting from the innovation appetite of Chinese OEMs that are fast moving here into the electrification of all these systems.
Now let’s talk a little bit also about the expected financial outcome of our investment. We have built a fantastic growth platform that benefits from the Verbund advantages. We have leading cost positions. And we also, as I hope I could show you, we enjoy customer proximity. We benefit from our local R&D capabilities. And as Hary has explained, we are also leading when it comes to sustainability and are well prepared for the green transformation in China.
So what we expect is that by 2030, we will achieve sales of between EUR 4 million and EUR 5 billion from the Zhanjiang Verbund site, this is roughly equivalent to around 10% of the current sales in our core businesses. The EBITDA is expected to reach between EUR 1 billion and EUR 1.2 billion by 2030. For ’26, however, we have said this before, we anticipate still a slightly negative EBITDA. This has to do with the start-up cost with the fact that we are still further optimizing the infrastructure utilities to the sweet spot. So all this will come during the course of the year. And then the key inflection point is expected in 2027 when the site reaches full capacity utilization, the start-up costs phase out and the optimization measures begin to take effect. So against this backdrop, we clearly expect the site to contribute positively to EBITDA from 2027 onwards.
Christian Faitz
Kepler Cheuvreux, Research Division
Two questions, please. First of all, how certain can you be of the expected still overproportionate growth of the Chinese market into 2030 as you elucidated on Slide 5 of your presentation. I mean for one, China is already more than 40% of global chemical markets. And according to our data, you just cited apparently even more than 50%. And some geopolitical factors have necessarily changed over the past 18 months or so, Liberation Day, Iran conflict, et cetera, just to name the most important ones. So would this mean a shift away from China, at least in terms of growth? Or what is your perspective there?
My second question, as we have the opportunity to talk to you, Markus, as CEO in the last month of Q2, would you mind providing us with the trading update of the key trends you have observed so far in Q2. Are chemical customers, for example, still panic buying as they are afraid that logistics globally might be more challenging going forward? And how do you assess underlying demand in your key customer industries?
Markus Kamieth
CEO & Chairman of the Board of Executive Directors
Yes. Thanks, Christian. Markus here. I will try to take both questions, starting with the first one. Of course, these are projections, but please also look at the time frame that we have also taken here, we are not speculating now for the next 15 or 20 years. This is really an outlook for 2025 until 2030. So it’s fairly certain. And I would say, also is very much in line with what we are observing already in 2026.
As you know, chemical market growth has in China been significantly above 5% last year in 2025 and also continues this year with a very strong demand. Now short term, this is certainly overproportionately driven by export growth of customer industries, but we still believe that there is a robust domestic demand developing also in China. And this is also, I think, from our perspective, at least underlined by a solid fundamental, let’s say, policy directions in China. So short term, until 2030, I think we’re fairly certain that this picture is valid. And it, of course, is also particularly impressive in comparison to the rest of the world where we do not see any chemical demand growth, and this is particularly due to the weakness that we are seeing in customer industries in Europe and in North America.
So yes, China looks a little bit better relative to other regions. But in general, the short-term outlook from our perspective is at least fairly robust, plus/minus the usual ups and downs, but China has, again, in the Iran conflict from my perspective, at least proven its resiliency when it comes to industrial value chains. China has, let’s say, reacted or has been affected much less than people have predicted in early March.
Second question on Q2, let’s say, current trading, I have not seen the May results, I have to say. But based on what I’ve seen in terms of volume development, I can say that the short term spike that we have seen when it comes to volume, especially in March, slightly lower than in April is somewhat normalizing. So May looks more like April than it looks like March. So this is what you call panic buying, I would say, this was certainly a certain insecurity in value chains in particular, in Europe, that is somewhat tailing off. But what we continue to see is a rather robust price development when it goes — when you compare April, May, we still see some areas where pricing has even strengthened.
So overall, I would say, May looks like a continuation of a fairly strong April. So we expect that in Q2, we should be able to come in around analyst expectations given the current dynamics. But of course, we have to wait until June is in. We see somewhat of a, let’s say, overall normalization, so no big hectic effects, but the inflation overall is, of course, not going away within security in Iran not tailing off.
Stephan Kothrade
CTO & Member of the Board of Executive Directors
We have always brought the latest technology to China. We did this at the Nanjing Verbund site, we did it at our sites in the Greater Shanghai area with the MDI asset we built in Chongqing, and this is paying off. It’s a combination of the technologies we bring, but it’s also the way how we operate the sites. And here, you can always make a difference. And this now brings me to this aspect of your question where you’re asking, what do all the data and the digitalization and AI tools really help you in terms of achieving a cost advantage.
The point is at the end of the day, when you invest, it’s important that your plants really run 24/7, 365 days a year. You don’t want to have any hiccups. Any unwanted unplanned shutdowns. You want to be always back on track as soon as possible. And here, we can see when we compare to peers, but also when we compare BASF internally that our asset park in China shows the best performance globally. And I’m pretty sure that now with the newest technologies and what we built in Zhanjiang, this will even set new benchmarks over time when we advance on the learning curve.
Now comparing this between different regions is difficult because you have a different raw material base, you have different partners across the fence. But what I can say is, if you look now into the cost position of some of our key products like acrylic acid or butyl acrylate that I mentioned or NPG, products where already today, we are extremely cost competitive in China. Now if we compare the new plants in Zhanjiang with the assets in Nanjing, I can say this is, again, a further reduction in cash cost position. So we are very much to the left side. And in the example that I’m just mentioning, the cost leader in the Chinese producer landscape. So this will pay off over time and really further improves our position in key value chains of BASF.
Markus Kamieth
CEO & Chairman of the Board of Executive Directors
And last point maybe, Chetan, what’s always important is, for us, is the cost position in the region that our assets are in. So comparing now the absolute, let’s say, cost of goods sold of Zhanjiang to Ludwigshafen to Geismar is not so relevant because most of our products actually do not travel so much. So we’re not a polyethylene producer where you are moving your assets to the lowest feedstock region and then distribute from there to the world.
But our products that you’ve seen in Stephan’s presentation are typically in the region for the region, and this is why you have to be competitive where you are. So for us, for example, despite the fact that we might have lower cost because we have newer assets in Zhanjiang for certain of our products, we would not — it would not make sense for us to ship them from Zhanjiang to Europe because we have also very competitive assets here in Ludwigshafen even if they are older. So for us, the competitiveness in the respective markets is much more relevant. And that’s why you heard us often talk so much about the relative cash cost position in China.
Stephan Kothrade
CTO & Member of the Board of Executive Directors
Yes. India is definitely an interesting market. We have defined India as 1 of the 7 advanced countries in our winning ways strategy because we see that there is now more and more investment into industrial production, into manufacturing, which translates into demand in our customer industries. So the size of the Indian chemical market is becoming more relevant. But you also have to take into account that if you compare the Indian chemical market to the Chinese chemical market, there is a difference of a factor of 15, 1-5. So I would also say the Indian chemical market fits into one larger Chinese province. But nevertheless, it’s fast growing. It’s interesting.
But coming to one aspect of your question. India is definitely not a platform to produce chemicals or plastics for export. So if we look into opportunities in India, it’s for the domestic market. We would need a very competitive setup in one of our key value chains. It’s something we are considering, but we are not in a rush.
We are not in a need to do anything at this and you also know our guidance when it comes to CapEx. We want to stay below depreciation levels. So yes, there’s opportunities. We will always look into opportunities in India, but it’s too early now to come to a decision point or to make any announcements at this stage.
Markus Kamieth
CEO & Chairman of the Board of Executive Directors
Yes, Sebastian, I think your question was also whether we are supplying maybe India from Zhanjiang. That is certainly not the intent. But as Stephan said, we believe in India, we believe India is a very promising market for chemicals in the next decade. So we are thinking about investment oppurtunities also in India because I don’t believe that at the end, you can be long term successful by importing products into India. But we’re doing this, of course, right now, successfully, for example, also from our Southeast Asian Verbund in Kuantan. But also from Europe, we are importing into India now with the new free trade agreement with India that even is more competitive. So overall, we are preparing India for the next growth phase, but we have nothing imminent yet, but we believe in strong local chemical production in India for the next decade.
June 7, 2026
Huntsman Sells its Italian Based Automotive Aftermarket Business
Download as PDFJune 05, 2026 9:14am EDT
THE WOODLANDS, Texas, June 5, 2026 /PRNewswire/ — Huntsman Corporation (NYSE: HUN) announced today that it has sold Huntsman Gomet, a business located in Azeglio, Italy, to Trelleborg Group for €42.5 million (approximately $50 million), subject to customary post-closing adjustments. Gomet is a manufacturer of molded rubber and thermoplastic automotive aftermarket components, which was a business within Huntsman’s Polyurethanes division, and was acquired by Huntsman in 2014 as part of the Rockwood acquisition. In 2025, Gomet generated revenues of approximately €24 million. The proceeds from this transaction will be used to reduce outstanding borrowings.
Houlihan Lokey served as financial advisor and Freshfields LLP served as legal counsel to Huntsman Corporation.
June 4, 2026
Somnigroup’s $2.5B acquisition of Leggett clears U.S. antitrust review
Sheila Long O’Mara //Executive Editor, Furniture Today//June 4, 2026
DALLAS – Somnigroup International‘s proposed $2.5 billion acquisition of Leggett & Platt has cleared a regulatory milestone as the required federal antitrust waiting period expiring without a challenge.
Somnigroup disclosed in an SEC filing today that the 30-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired June 3. The expiration means U.S. antitrust regulators did not move to block the deal, a step forward in the acquisition process.
Leggett & Platt filed a similar disclosure with the SEC today confirming the same HSR expiration.
Somnigroup, the Dallas-based parent of Houston-based Mattress Firm and Tempur Sealy, announced the acquisition agreement with Leggett & Platt in April. Under the terms of the deal, Leggett & Platt would become a wholly owned subsidiary of Somnigroup.
The companies expect the transaction to close by year-end 2026, though several conditions remain. Leggett & Platt shareholders must still vote to approve the deal. Regulatory clearances are still pending in Canada, the European Union, the United Kingdom, South Korea and Austria.
The proposed combination would bring together Somnigroup’s manufacturing and retail business with Leggett & Platt’s extensive manufacturing and components operations, which supply the bedding and home furnishings industries with innersprings, foam, adjustable bed bases and other hardware.
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