In a recent event, on 24 February 2023, the world's largest chemical producer, BASF, declared to shutting down its Caprolactam production line and reduction of the Adipic Acid manufacturing capacity at the Ludwigshafen site, Germany.

Caprolactam is a core ingredient in the production of Nylon 6. BASF's Caprolactam plant in Antwerp, Belgium, will be able to meet the demands of the European captive and merchant markets.

In addition, production of Adipic Acid will continue as usual at the joint venture with Domo in Chalampé, France, which has sufficient capacity to supply the company in Europe in the altered market environment.

The polyamide 6.6 production facilities in Ludwigshafen that require Adipic Acid as a precursor will continue to be managed by BASF.

The structural modifications will significantly decrease the power and natural gas consumption for the Ludwigshafen plant. As a result, Ludwigshafen's annual CO2 emissions will drop by about 0.9 million metric tonnes. This will result in a 4% decrease in BASF's global CO2 emissions and an improvement in the air quality in the region.

For the Ludwigshafen site, BASF is seeking more sustainable energy sources. The company intends to use heat pumps and more eco-friendly steam-producing techniques. Additionally, new CO2-free technologies, like water electrolysis for hydrogen production, are planned for implementation.

This shutdown will lead to a decline in employment in Germany. High energy prices are further hampering profitability and competitiveness in Europe.

BASF projects that the closures in Ludwigshafen will affect more than 600 workers overall and a 10% decrease in the replacement value of the complex's assets. According to BASF, the closures will also result in a 4% reduction in its overall CO2 emissions.

As per the Analyst, the cost of Caprolactam and Adipic Acid hovered around USD 3265/MT on a FOB Hamburg basis and USD 3260/MT on a FOB Hamburg basis on 24 February 2023.