BASFY BASF SE (QX)

German chemicals major BASF expects a six-day nationwide rail strike in Germany starting Wednesday will have more of an adverse impact on hauling the company's products than previous strikes and necessitate a greater use of road transport.

"In normal circumstances, we handle about 30% of our transports by rail. Due to the rail strike, we are now forced to shift railway transports on a large scale to trucks," said Uwe Liebelt, President of European Verbund Sites at BASF, in a statement shared with OPIS on Wednesday. "This will increase logistics costs and CO2 emissions."

BASF said that it had taken measures to cushion the effects of the upcoming strike on production sites and customers, but added that its operations were still recovering from adverse weather and a previous rail strike earlier in January.

"The fact that the strikes are occurring very close together, giving BASF very little preparation time, and the existing backlog due to last week's snowfall that has not yet been cleared, significantly complicates the situation," the company's statement said.

The international competitiveness of Germany, "which is already under considerable pressure due to high energy and raw material costs, will be further damaged," said Liebelt, who is in charge of BASF's chemical production sites that have highly interlinked product flows.

BASF's Ludwigshafen site is one of the world's largest integrated chemical complexes. The site is home to a dense network of 200 plants that create a variety of products and petrochemicals for diverse industries, according to the company's website.

The company declined to say whether run rates at any of its sites have been impacted by the strike.

German train drivers began the record six-day strike starting January 24 after their union rejected state-owned rail operator Deutsche Bahn's latest wage offer. The country's cargo train drivers began their strike on the evening of January 23.

GDL, the trade union representing Germany's train drivers, said the fourth round of strikes in the ongoing wage dispute will last until January 29, 6pm Central European Time.

Later on Wednesday, Germany-based chemicals producer Covestro told OPIS that there were no "restrictions" on production at its sites due to the strikes.

"We have made the best possible preparations for the strike and, wherever possible, switched to road and inland waterway transportation at an early stage," said a spokesperson for the company. "We currently see only limited effects on Covestro and can continue production without restrictions. At the same time, the changeover is naturally accompanied by increased operating expenses."

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Fahima Mathé, fmathe@opisnet.com; Editing by Anthony Lane, alane@opisnet.com

(END) Dow Jones Newswires

January 24, 2024 13:26 ET (18:26 GMT)

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