If you look a little bit on the market side, we clearly say this, we see that order entry is really stabilizing. We see a surprising uptick in China, I have to say. India certainly was anyway a little bit more resistant, which does not give too much effect because of the market size. But China is a significant part, and actually, some of the plants over there are pretty much loaded again. And we will actually close the gap to volumes from last year or most probably for the whole year quite nicely. The problem is that the margins are not too high because of also, let’s say, the supply/demand piece here. Dirk said already a little bit of automotive, which I think as an industry will also help us. We don’t expect that this is now softening until year’s end, and we certainly hope that we get maybe a little bit of tailwind by the whole stabilization.
So, that’s the ingredients, how we think we can manage Q4 to close the gap to the lower end of the guidance. I hope that helps you a little bit, Chetan.
Chetan Udeshi: No, that’s useful. Thank you.
Stefanie Wettberg: Now, we come to Charlie Webb, Morgan Stanley. Your turn.
Charlie Webb: Morning everyone. Thank you for taking the questions. Maybe one, just kind of following up on a few points there, but just around the oversupply situation you see more holistically across upstream chemicals and how you’re playing out kind of through 2024. You obviously talk about demand returning. But when you look at kind of historical context of where supply and demand sits today versus the past, and the likelihood of your expectations around the demand recovery, is it a case that it’s just demand that’s going to get us there? And kind of what timeframe do you expect that to play out? Or do you think now actually we need supply to come out of the market? And if so, are we seeing any signs of that? It feels like holistically, Europe’s now top of the cost curve, maybe it wasn’t in the past, and therefore, perhaps should be the one taking capacity out.
Just trying to get a sense on how that oversupply situation kind of resolves itself and your view on that looking through into 2024 — into 2025? And then just another one around China, obviously, at the start of the year, we were more upbeat, and I think yourself around China’s growth prospects for 2023. Obviously, that hasn’t really materialized perhaps at the pace that people had hoped, albeit you’re stating some — towards the end of the year. Looking into next year, do you think anything has changed versus the past in terms of the growth algorithm for China as it relates to chemical consumption? Or are you still very convinced that the kind of the growth consumption levels you’ve seen for chemicals in China is unchanged? Thank you.
Martin Brudermüller: China — maybe let me start with the last one. Yes, we have expected that there will be more impact from China in 2023 second half. That was what — how we started into the year. And I think we have to clearly say the world had to learn that also China cannot walk on water. So, it is a little bit more difficult for them also to kickstart their industry, has also to do with their growth model. I would expect that the longer run, they will change this in a way that it’s also more driven by green tech because currently, too many apartments empty and certainly the value dropping for people who put their saving moneys into apartments is not really helping. Then the whole infrastructure part, which was strongly built, you cannot build continuously airports and fast railway tracks in harbors.
That also comes to an end and the export is also going down by the weakness in the overall situation. So, that is not helping China and it’s also not easy to solve this. Nevertheless, we look into this regularly and the fundamentals of China. Also, if you look in the per capita consumption is so distant from some lifestyle that there is, even if you are conservative, at least for the next 10, 20 years, enough substance to make China grow and growing and that is actually what we do. And I think we are lower on the rates over there, more in the 4% range than higher and that all makes still a lot of sense for our investments over the years. So, with that, long-term, fine, but maybe in the short-term, a bit more bumpy than we actually thought. You talked about oversupply, not a totally new situation.
And you know that it’s very difficult to make statements here for the whole portfolio of Chemicals. You have to look into this by product lines. But also in the past, we had situations where we thought the overcapacities for a decade and then actually with a strong demand increase that was gone after two or three years. So, I would confirm what you said, the major topic currently is really an extremely low global demand. And I have not seen it in my 17 years of Board membership here in BASF that really across all regions, it was so incredibly low like now and by that also including China. I think if you look into the lines, I would say there is very few ones where you have maybe a little bit more doubts. This is getting in line again. But for the most of the chemicals, we have actually — it is a bit more challenging, some capacity is coming up.
But I think nothing that would worry me now to fundamentally change our, let’s say, timeline in investments and so on. So, I think once the global demand comes back, I think that will drive margins, that will drive the whole business and will bring supply/demand, at least, overall over the portfolio closer together again.
Charlie Webb: Maybe just a really quick follow-up on that point. I mean, can you give us any sense where you’re kind of utilization — burn utilization rates kind of fit by region, just roughly? I mean, you talked about China, loading has been pretty high. You’re getting to a pretty good level. But how is that comparing to Europe? And how does that compare in North America?
Martin Brudermüller: I mean, I will not give you that by region. I would say currently, on a global level, that’s between 60 and 70s. If you go to normal times, you are in the 80s, somewhere — or up to 80s, slightly above 80. So, that has a regional, let’s say, difference here. If I tell you that — and I was in China last week that our team told us that some of our plants are pretty much sold out again in China, then this gives you an indication that they run quite nicely and steam. The problem is really margins and prices.
Charlie Webb: Thank you very much.
Stefanie Wettberg: Okay, since we have a few more analysts on the line, ideally please limit yourself to only one, maximum two questions. We will now move on to Jaideep Pandya, On Field Research and we’ll then have Andreas Heine and Laurent Favre in the following. So, now, Jaideep Pandya, please go ahead.
Jaideep Pandya: Thanks. First question is just on your interest cost. You have about €3 billion plus of debt to refinance in 2024 and 2025. So, Dirk, could you just give us some color what will be the interest costs — or what could be the interest cost increase in 2024 as you refinance some of your debt? And then the second question, sort of links back to the inventory points you made. If you think that you’re still reducing inventories next year, should we then think that you will continue to sacrifice utilization for reducing inventory, and therefore, even if demand does go up, we should not go worldly bullish, at least for your upstream business for Materials and Chemicals? Thanks a lot.
