BASF chief says China megaproject will take longer to pay off

German chemicals company BASF expects its multibillion-euro investment in a new chemical plant in China to take longer than planned to become profitable, Chief Executive Markus Kamieth said days before the facility's opening.

"We are starting in an oversupplied market where prices and margins are at historically low levels," Kamieth told the Sunday edition of the Frankfurter Allgemeine Zeitung newspaper.

"Profitability in the first years will therefore be significantly below what we had originally envisioned."

Kamieth nonetheless defended the decision to build the plant, despite geopolitical risks including a potential conflict over Taiwan. China considers Taiwan part of its territory and has vowed to bring the self-governed island under its control, if necessary by force.

"If we stop investing in China, we are withdrawing from half the global market. This scenario is significantly riskier for me than investing in China," said Kamieth.

The new site in Zhanjiang, in southern China, is set to open on Thursday and has cost around €8.7 billion ($10 billion), according to the world’s largest chemical company. It is the biggest single investment in BASF’s history.

At the same time, Kamieth said BASF continues to invest more in its main site in Ludwigshafen, Germany than anywhere else, and this will remain the case going forward.