BASF to Streamline Portfolio with Hydrosulfites Business Exit

BASF Announces Exit from Hydrosulfites Business, Closing Ludwigshafen Facility

BASF SE announced its decision to exit the hydrosulfites business, signaling a further strategic recalibration of its portfolio. This move includes the closure of its production facility in Ludwigshafen, Germany, as the chemicals giant focuses on optimizing operations for long-term value creation.

The Event in Detail

On September 24, 2025, BASF SE confirmed it would discontinue the supply of its hydrosulfite product range, which includes Hydrosulfite F, HydroBlue 90, HydroBlue 92, Hydrosulfite Evo, Adlite, and Blankit. The associated production facility at its Ludwigshafen site will be closed. Approximately 65 employees currently working in the hydrosulfites business are slated to receive support in securing alternative positions within the broader BASF Group. Hydrosulfites serve as crucial reducing agents in the textile industry for dyeing processes and as bleaching additives in pulp and paper applications.

Analysis of Market Reaction

BASF's exit from the hydrosulfites market is a direct outcome of its "Winning Ways" strategy, which prioritizes profitability and long-term value creation. The decision is integrated into an ongoing strategic review of its production setup, particularly at the Ludwigshafen site, and aligns with a broader cost-cutting program targeting €2.2 billion in annual savings by 2026. This initiative addresses overcapacity and high energy costs in Europe. The move underscores a sector-wide trend among chemical firms to divest non-core, commoditized assets in favor of sustainable solutions and high-growth areas, funding innovation in low-emission technologies and circular economy models. While the exact revenue contribution of the hydrosulfite unit was not specified, its discontinuation reflects a shift towards higher-value activities. The immediate impact on BASF SE's stock (BASFY) is anticipated to be neutral to slightly positive, as investors may view strategic streamlining as a positive step towards improved profitability and competitiveness.

Broader Context & Implications

The global sodium hydrosulfite market is projected to reach USD 1.4 billion by 2025, growing at a compound annual growth rate (CAGR) of 4.0% through 2035. This market is highly concentrated, with a few major players, including BASF, Transpek-Silox, and Chinese producers like Zhongcheng Chemical and Jinhe Group, collectively controlling over 50% of global capacity. BASF's withdrawal will likely intensify competition among the remaining players for market share and could influence pricing strategies, particularly for the specific products it supplied. From a broader financial perspective, BASFY shares have declined by 5.3% over the past year, compared to a 27.3% decline in the overall Basic Materials sector, suggesting some resilience relative to the industry average despite operational challenges. The company's diversified portfolio, spanning 35% of global chemical sales, provides a buffer against volatility in niche markets.

Expert Commentary

Dr. Ramkumar Dhruva, President of BASF's Monomers division, emphasized the strategic imperative, stating:

"Focus is a cornerstone of BASF's Winning Ways strategy. By concentrating on profitability and long-term value creation, we are safeguarding the competitiveness of our business in a challenging economic environment."

This statement highlights the company's commitment to strategic repositioning in a dynamic global market.

Looking Ahead

BASF's post-hydrosulfite strategy centers on three key pillars: sustainable chemicals, industrial solutions, and green energy integration. The company plans to invest approximately €600 million annually from 2025 to 2028 into its transformation efforts, deploying artificial intelligence across business operations to enhance productivity and innovation. While pursuing significant investments, such as the €10 billion petrochemical complex in Zhanjiang, China, BASF acknowledges potential pressures from global and Chinese overcapacity in certain products. The company's reliance on core regions like Europe and China introduces risks associated with high energy costs and geopolitical tensions, though its broad portfolio is expected to mitigate these. This strategic overhaul aims to align BASF with a future driven by fierce competition and carbon-neutral goals, adapting by divesting traditional assets and investing in future technologies.