On Monday, July 29, an explosion and subsequent fire occurred at a plant in the southern part of BASF's chemical complex in Ludwigshafen, Germany. This facility produces aroma ingredients and precursors for vitamin production.
BASF suspects that a leak of an organic solvent triggered the explosion, but the exact cause remains undetermined. The company's fire department successfully extinguished the fire, and the facility has been shut down.
Regarding the duration of the shutdown, BASF states that it is too early to comment.
As of August 5, restricted access to certain sections of the plant has been granted. Firefighting water, which requires special treatment, has been removed and pumped into designated containers, and further assessment of the impacted areas is underway, a spokesperson told us.
In terms of production impact, BASF cannot rule out delays or disruptions for products from the vitamin E and vitamin A value chain and related carotenoids. However, core products from the aroma ingredients portfolio, including Citral, Citronellol, Linalool, Geraniol, Lysmeral, and related derivatives, continue to be produced. There may be delays or disruptions for other selected aroma ingredient products, he reported.
Fifteen employees sustained minor injuries in the blast but were discharged from the company’s medical facility shortly after.
Historical context
This incident is reminiscent of a previous event in October 2017, when a fire at BASF's northern Citral facilities at the Ludwigshafen site led to a plant shutdown and a force majeure declaration for Citral and Isoprenol-based aroma products.
The shutdown, with concurrent supply disruptions in China, resulted in the price of vitamins A and E rising sharply, prompting market innovation for alternative feed sources.
Market nerves
Tracking industry impact from the BASF plant shutdown, some believe it is too early to speculate on market consequences.
One supplier told us its customers are increasingly anxious about the incident, noting market uncertainty about whether it will escalate like the 2017 accident. “At this moment, it appears that all suppliers are waiting for further information from BASF, and no one is willing to make offers to the market.”
Hal Gervis, director of operations, Alltech EMEA, seemed unconcerned for now: “We have a good inventory and sufficient cover for the foreseeable future.”
Vitamin prices
Stefan Schmidinger, head of market intelligence at Swiss data provider Kemiex, commented that the situation for vitamin A, E, and carotenoids remains highly dynamic, with price discovery being hampered by a lack of liquidity as major market players adopt a wait-and-see approach.
“Few suppliers are offering actively, and opportunistic spot offers for smaller quantities of vitamin E and vitamin A could reach price levels of about 30-60% above those in July, or even higher," he noted. "This morning, customers in China reported a notable increase in ask prices, with feed-grade vitamin E 50% priced north of US$18 and vitamin A around US$40, although transaction prices tend to be lower still."
Schmidinger added: "The prevailing view from buyers’ scenario planning is that this is a serious short-term issue, perhaps worse than the ZMC accident in April, although it is not affecting their immediate coverage. While repercussions on the scale of the major Citral incident in 2017 are not anticipated as the base case, stakeholders are closely monitoring new developments. All eyes are on BASF and further updates regarding its ability to supply."
The next update from BASF on production impact is expected on August 7.