German chemical giant BASF announced it will invest in a new Neopentyl Glycol (NPG) plant, with an annual production capacity of 80,000 metric tons, at its Zhanjiang Verbund site in South China's Guangdong province.

The new NPG plant, which aims to support growing demand in China, demonstrates BASF's confidence in the country's economic prospects.

"Investing in an NPG plant at the Zhanjiang Verbund site will enable us to support growing demand from customers in Asia, particularly in the field of powder coatings in China," said Vasilios Galanos, senior vice-president of Intermediates Asia-Pacific, BASF.

"Leveraging the synergies arising from our unique Verbund model and top-notch technologies, we are confident that our investment in the NPG plant will enhance our competitive edge, mainly in China," he said, adding that China is the world's largest chemical market.

After the new NPG plant comes on stream in the fourth quarter of 2025, BASF's global NPG capacity will be boosted from 255,000 tons to 335,000 tons annually, strengthening its position as one of the leading NPG manufacturers in the world, according to a press release from BASF.

Currently, BASF has NPG production facilities in Ludwigshafen, Germany; Texas in the United States; as well as Nanjing, Jiangsu province, and Jilin, Jilin province in China, it said.

Anup Pandey, director, business management, acids & polyalcohols, BASF Intermediates Asia-Pacific, said: "We are responding to the growing demand of Chinese customers for environmentally friendly powder coatings. We will step up construction of the new NPG plant to support the growth of our business partners, while expanding our footprint and sustaining our position as a leading supplier in this vast market."

Boasting high chemical and thermal stability, NPG is an intermediate mainly used in the production of powder coating resins, which are particularly useful in the construction industry and for coating household appliances.

Due to their low levels of volatile organic compounds (VOCs), powder coatings enable manufacturers to comply with VOC emission standards by reducing the release of VOCs by up to 50 percent compared to liquid coatings. Other applications of NPG include the manufacture of lubricants, plasticizers and pharmaceuticals.

Guangdong province and BASF have vowed to jointly promote and accelerate the comprehensive construction of the Zhanjiang Verbund site project in the months to come after a high-level consultation meeting held in the province last month.

The Guangdong provincial government promised to fully support BASF's investment and development in Guangdong, actively provide high-quality services in human resources, lifestyle logistics and other aspects, and provide a market-oriented, legal and international business environment for the project's construction.

BASF will invest up to 10 billion euros ($9.7 billion) by 2030 to build the Verbund site, a benchmark project representing Sino-German cooperation.

Meanwhile, BASF inaugurated its first plant at the Zhanjiang Verbund site earlier in September, indicating the mega project has been promoted with high efficiency and progress has been achieved.

The new plant will produce 60,000 tons of engineering plastic compounds per year for customers in China, bringing BASF's total annual capacity of engineering plastics in the Asia-Pacific to 420,000 tons by 2023.

BASF generated a sales volume of 78.6 billion euros worldwide in 2021.