BASF says Iran war tensions have had limited impact on business

German chemical giant BASF says it is well-positioned to weather geopolitical tensions and uncertainty surrounding the Strait of Hormuz amid the Iran war, with chief financial officer Dirk Elvermann pointing to the company's robust performance. 

Elvermann said BASF was benefiting from its regional setup, integrated value chains and high raw material flexibility in production.

"In this difficult global economic environment, BASF is doing really well," Elvermann told dpa and the financial news agency dpa-AFX in comments published on Saturday. He said the company could switch to using butane and propane as raw materials in its large upstream plants at times when naphtha was very expensive.

The temporary closure of the Strait of Hormuz due to the Iran war had so far only affected BASF indirectly, he said. The company had limited exposure in the Middle East and did not need to route any significant shipments through the strait.

However, if the restrictions were to last longer and weigh more heavily on the global economy, this could also affect BASF through falling demand.

For now, the company had "adequate order books," Elvermann said. He said customers in Europe had become more sensitive, worrying about their supply chains and wanting at least a European company as a second supplier. "We are already noticing this in demand and particularly in prices," he said.

BASF was seeing stronger pricing power again compared to previous quarters, meaning the company was able to raise prices for its products without demand falling significantly.

Turning to global competition, Elvermann stressed the importance of further savings and efficiency programmes. Given worldwide overcapacity in the chemicals industry, the company had to consistently improve its cost base and adapt production structures.

Alongside job cuts - primarily at its main Ludwigshafen plant, where the number of employees had fallen from 33,370 at the end of 2024 to around 30,000 full-time positions - BASF had also been pursuing a broader corporate restructuring for some time.

At the same time, Elvermann called for better economic policy conditions in Europe. Productivity, investment and competitiveness needed to be strengthened, he said. He welcomed recent reform plans by the German government, including on pensions, but said Europe as a whole needed to pursue industrial and competition policy more decisively in order to remain competitive internationally.