BASF increases cost of intermediate solvent due to material and utility costs

By Dan Stanton

- Last updated on GMT

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Increased utility and material costs blamed on BASF price increase
Increased utility and material costs blamed on BASF price increase
BASF has raised the price of 1,4 Butanediol (BDO) and its derivatives, citing energy costs as a key factor.

Almost half of BDO produced is dehydrated to make the intermediate Tetrahydrofuran (THF), used as a solvent in the manufacture of a number of pharmaceuticals. Chemical company BASF announced this morning it was to increase the cost of THF by an extra €70 ($95) per metric tonne, due to the increased cost of the raw material.

On top of this, BASF spokesperson Klaus-Peter Rieser told the change in price reflected the increased cost of utilities - “electricity, logistics and the whole package.”

Reiser declined to say whether the price increase was in keeping with the wider THF market, explaining that: "We do not comment on competitors' activities. As one of the largest producers worldwide it is necessary [for BASF} to remain competitive in the long run."

BASF manufactures THF from facilities in Germany, North America, Malaysia, Korea and China. Rieser could not divulge BASF’s general pricing but according to chemical market information provider ICIS​, a metric tonne of THF costs $3307 thus this represents a three percent increase.

Increasing costs and UK industry concerns

This increase is the latest in a number of ingredient cost increases with Evonik raising its costs for excipients​ used in modified release formulations by ten percent, in order to “cover cost increases.”

Furthermore, high energy costs in the UK were cited in a recent survey of manufacturers carried out by the Chemical Industries Association (CIA)​ - a body that represents both pharma firms as well as suppliers like BASF and Dow - as having a negative impact on industry.

Since then, the CIA has sent a letter to UK Chancellor of the Exchequer George Osbourne explaining the results of the survey and rising concerns on energy costs, security of energy supply as well as cost of logistics, the attitude of regulators and the strength of the local market.

“Government in the UK and the European Union needs to look carefully at the design of industrial policy to ensure the concerns of business leaders – who are making investment decisions – are considered,” ​the letter said.

“Without urgent action on energy costs and the regulatory framework – including a completely ill‐judged Industrial Emissions Directive which provides zero improvement to the environment, I fear the general optimistic outlook of our members will fade.”

The letter was not fully scathing of the Government’s policies, with results from the survey showing there were positives in the form of workforce skills, support services (such as distribution), engineering support, financial etc) and taxation.

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