Strait of Hormuz Disruption Gives BASF a Competitive Edge as Coatings Divestiture Nears Closure

BASF shares rise 1.4% as EU approves €7.7bn coatings sale to Carlyle; Middle East turmoil boosts competitive edge, but restructuring and industry headwinds persist.

The escalating conflict in the Middle East is reshaping the global chemical landscape, and BASF is emerging as an unlikely beneficiary. With the Strait of Hormuz largely blocked — a chokepoint that normally carries 20% of the world’s oil and gas production alongside 5–10% of basic chemical feedstocks — Asian producers are scrambling to maintain supply chains. European manufacturers like BASF can keep delivering across the continent despite high energy costs, giving the Ludwigshafen group a short-term competitive advantage that has already begun to show in its share price.

Against that geopolitical tailwind, the EU Commission on Thursday cleared the long-awaited sale of BASF’s coatings division to private equity giant Carlyle. The deal, valued at an enterprise level of €7.7bn, will hand BASF a gross cash inflow of roughly €5.8bn before taxes — a critical injection as the company pushes ahead with its restructuring. Brussels did impose one condition: Carlyle must divest Nouryon’s polysulfide business, which supplies sealants to the aerospace sector, to prevent monopolistic distortions in that niche market.

Investors reacted positively, pushing BASF shares to €51.37 in early XETRA trading before they settled at €51.24 on Thursday, up 1.39% from the previous close. That keeps the stock comfortably above its 200-day moving average of €46.79 — a level that translates into a gain of roughly 8% from that line. Despite a 5.8% pullback over the past 30 days, the shares have gained 14.5% since the start of the year and are nearly 20% higher year-on-year. The relative strength index of 41.9 points to neutral territory, with no sign of overheating or panic selling.

The coatings divestiture is only one piece of a broader transformation. In parallel, BASF is pressing ahead with its “CoreShift” efficiency programme, led by Julia Raquet, which targets a 20% reduction in cash-effective fixed costs in the core business by 2029 versus the 2024 baseline. That ambition is set against a grim industry backdrop: the German Chemical Industry Association warned this week that chemical-pharmaceutical production fell 2.8% in the first quarter compared with the previous quarter, and capacity utilisation has slipped to 75.1% — well below the level needed for healthy margins in the core operations. CFO Dirk Elvermann has repeatedly flagged currency headwinds and volatile raw material prices as ongoing drags.

The company has also been returning capital to shareholders via buybacks. As recently as late May, BASF repurchased 950,000 of its own shares, bringing the tally since November 2025 to nearly 27.8 million shares. The next major catalyst for investors will be the second-quarter earnings report due on 29 July. Analysts currently forecast full-year earnings per share of €2.72 and a dividend of €2.28.

Whether the Carlyle deal provides enough momentum to push BASF past its 52-week high of €55.05, set in April, depends largely on how swiftly the investor can execute the required Nouryon disposal. For now, the chemical giant is navigating a rare moment where geopolitics and corporate strategy happen to align — even as the underlying structural challenges remain unmistakable.