BASF Bolsters Southeast Asian Supply Chain as Deutsche Bank Flags 17% Recovery Potential

BASF commissions new 2-EHA storage tank in Indonesia; analyst sees 17% upside with buy rating, but German chemical sector faces downturn amid rising cost pressures.

BASF has taken a quiet but strategically important step in Indonesia, commissioning a new storage tank for 2-ethylhexyl acrylate (2-EHA) at its Merak facility on 28 May. The move does not add production capacity, but it enhances distribution flexibility in a market where reliable delivery is becoming a competitive differentiator. 2-EHA, a key intermediate for adhesives, paints, and coatings, is already produced at BASF PETRONAS Chemicals in Malaysia and at the company's integrated Verbund site in Zhanjiang, China. The extra storage – for which BASF has disclosed neither investment nor capacity – gives the Ludwigshafen-based group an additional logistics node to shorten lead times for Indonesian customers.

Deutsche Bank Research sees a more decisive catalyst ahead for the stock. Analyst Virginie Boucher-Ferte reiterated her buy rating with a price target of €60, implying roughly 17% upside from the current level of €51.15. The shares have recently stabilised, with the relative strength index at a neutral 55.8. Yet they still trade some 6.5% below their 52-week high of €54.70. Boucher-Ferte’s conviction rests on BASF’s ability to push through price increases in a volatile geopolitical environment – a pricing power she views as the key to defending margins despite elevated energy costs and bureaucratic drag in Germany.

That optimism is being tested by the broader chemical cycle. Germany’s Ifo Institute reported a further deterioration in the sector’s business climate for May, with the industry index sliding to minus 30.2 points from minus 28.6 in April. Expectations collapsed to minus 42.0 points from minus 31.3, while the price indicator surged to 47.5 points from 32.5, signalling intensifying cost pressures. The German Chemical Industry Association (VCI) had earlier reported a modest 2% quarter-on-quarter uptick in both production and sales for the first quarter of 2026, but attributed the upturn to panic stockpiling linked to the Iran conflict. The VCI warned that this is a temporary peak, not a sustainable recovery.

Despite the headwinds, BASF’s digital communications earned recognition in a study by Instinctif Partners, which awarded the company four out of five stars. While the technical execution scored a robust 90 out of 100, the content-related communication of digitisation topics lagged at just 50 points. The study suggests that BASF has mastered the craft but still needs to articulate a coherent digital strategy.

The petrochemicals division, which generated around €7.5 billion in third-quarter 2025 revenue, remains under pressure. For the first quarter of 2026, BASF reported EBITDA before special items of €2.356 billion, down from €2.496 billion a year earlier. The company has confirmed its full-year guidance: EBITDA before special items of €6.2 billion to €7.0 billion and free cash flow of €1.5 billion to €2.3 billion. On the stock market, BASF shares have gained roughly 13% year-to-date, though they slipped 5.7% over the past 30 days and were recently quoted at €50.64 – 7.4% below the 52-week high. The interplay between operational fine-tuning in Asia and a fragile demand backdrop will determine whether the analyst’s €60 target proves attainable.