BASF SE, the eminent German company dealing with chemicals, plastics, coatings, crude oil, and natural gas, has recently collaborated with SINOPEC, the renowned Chinese oil & gas market player to increase the propionic acid capacity at the Nanjing site located in China. This facility, called BASF-YPC Co. is a state-of-the-art Verbund site, a 50-50 joint venture headquartered at Nanjing, with parent firms being SINOPEC, BASF, and the Yangzi Petrochemical Company Ltd. The venture was founded in the year 2000 for a deal valuation of USD 5.2 billion. As per reports, this integrated chemical site at Nanjing manufactures around 3 million tons of high grade polymers and chemicals per year, for the China market.
Propionic acid apparently has the ability to maintain the freshness of grains as it prevents the occurrence of molding. In addition, the acid is also used to manufacture solvents, thermoplastics, pharmaceuticals, and crop protection agents. This collaboration between BASF and SINOPEC has been proposed with an aim to fulfill the increasing demand for food and feed grain preservation and is forecast to push the growth of global and Chinese natural propionic market. As per reliable sources, the capacity is slated to be increased by 30,000 tons to a volume of 69,000 tons at BASF YPC Company Limited in Nanjing, from the first quarter of 2019.
The ever-increasing population, the improved standard of living, and enhanced consumer purchasing power have led to a surge in the demand for food, grain, and meat preservation, say industry experts. The preserved products will supposedly need to be incorporated with a longer shelf life and will need to comply with the revised laws of hygiene and animal feed safety. The expansion of the propionic acid capacity thus, will help both the companies provide intermediate chemicals to the market while contributing toward the development of a sustainable scenario, at the same time.
While BASF and SINOPEC already have strong ties through BASF-YPC Co., this deal will mark the beginning of a new strategic collaboration between both these giants operating in global chemicals market. This agreement, which has occurred during China’s 13th Five-Year Plan period, is an upgraded, industrial project that addresses the increasing demand for food safety and preservation in China. The top officials of both the companies have been quoted saying that they have considerable expectations from this joint venture and that the future prospects of this deal look rather lucrative when observed from either side of the spectrum.
One of the top executives of BASF has also stated that the increasing requirement for fresh meat has increasingly prompted the need to enhance hygiene and durability in animal feed. The increase in the propionic acid capacity is expected to increase the food preservation capacity, which in turn will help both the companies provide their customers with the vital intermediate product.