Large European biochemicals producers are expanding in Asia in a bid to maintain competitiveness.
BASF, Eni, Covestro, and Arkema are all increasing biobased capacity in China, Thailand, and beyond as operating costs at home climb.
We look at how these European companies have been investing in Asia and how it fits their strategic goals.
Europe’s competitiveness in question
Operating in Asia is nothing new for Europe’s biochemicals companies. Yet in recent years, the trend of setting up biobased capacity in Asia has accelerated. Capacity investments have also gotten bigger.
The trend mainly applies to the biggest firms, attracted by cheaper feedstock, highly-skilled labour, and booming biobased markets.
The macroeconomic environment in Asia contrasts with the one in Europe, where energy and feedstock prices increased after the pandemic and the Ukraine war. This makes it harder for larger firms to achieve what should be their competitive advantage – the ability to produce the biggest volumes at the lowest costs.
ENI in Malaysia, South Korea
An example of a large biochemicals producer pivoting to Asia is Italy’s Eni.
Known mainly as a “supermajor” oil firm, it is now leaning into lower carbon chemicals. To this end, it has invested 2 billion euros into three bio-refineries and chemical recycling in the last several years.
Eni’s leadership is pessimistic about Europe’s ability to recover its competitiveness. As a result, it is looking abroad to build renewable manufacturing capacity. Two of Enis’ three biorefineries now under construction are located in Asia: Malaysia and South Korea.
Joint ventures with local firms are an important way into the region for Eni, as they are for many other European firms setting up there. In Malaysia, it has been developing a biofuels biorefinery at Johor since 2024 with PETRONAS, a state-owned Malaysian energy group, and Euglena, Japan.
This SAF, HV, and bio-naptha plant was tentatively announced back in 2022. It is expected to be operational by the second half of 2028, with an estimated 650, 000 tonnes of annual processing capacity.
In Korea, Eni has broken ground on the country’ s first hydrotreated vegetable oil (HVO) and Sustainable Aviation Fuel (SAF) production plant. The 400, 000 tonne per year joint venture with Korean chemicals giant LG Chem and support Eni’s mission to diversify its products and geographic markets.
Biochemicals remain costlier to produce than legacy petrochemicals. This forces companies like Eni to be hyper-sensitive about costs when deciding where to produce.
By locating biobased capacity in Asia, companies like Eni are trying to boost the economic viability of their biochemicals in two ways: first, it grants access to cheaper inputs (energy and feedstock) and second, it places their wares in close geographical proximity to major growth markets, cutting transport costs.
BASF in Thailand, China
BASF, the largest chemicals company in the world, is no stranger to operating in Asia. It, along with Volkswagen and Daimler, accounted for a third of all European investment into China from 2018 to 2021.
Today, it continues to spearhead European chemicals investment into Asia. Although its core business is synthetic chemicals, BASF is ramping up company-wide use of biobased and recycled feedstocks as well as investing in dedicated biobased capacity. What it calls ‘transformation’ spending – investment into lower carbon technologies – is around €600 million per year.
Much of BASF’s biobased buildout is happening in Asia. BASF’s Chinese sites at Caojing and Minghang produce biomass-based automotive coatings. Both are aimed squarely at the Chinese market. In Shanghai, BASF’s factory is dedicated to biomass balanced polyamide 6.
Thailand has been BASF’s latest site of expansion. The company announced more biobased surfactant capacity there in November 2025, a move it says will help the company tap growing demand in the region. In addition, BASF operates a site in Yeosu, Korea that produces biomass balanced methylene diphenyl diisocyanate (used to make the plastic polyurethane).
BASF has certainly not abandoned Europe. Its biggest site remains its Ludwigshafen plant in Germany. The region also remains its biggest market by sales, with North America second. Yet Asia is now BASF’s primary focus for future growth.
BASF’s Asia strategy is based on a simple calculus: the company expects that 80% of the growth in the chemical industry will be concentrated in the Asia-Pacific region by 2035. It expects a key chemicals demand driver will be Asia’s immense automotive market.
We can contrast this optimism about the Asian market to BASF’s assessment of Europe in its last full year report: “low market growth rates…a slow recovery in demand, higher gas prices…and ongoing bureaucratic hurdles have significantly burdened the European chemical industry”, it stated.
Arkema in Singapore
In January 2026, French chemical company Arkema started operating its Singapore plant for polyamide 11, a chemical input made entirely from castor oil. It was the company’s biggest ever investment at $20 million, bumping up the company’s polyamide capacity by 50%.
The chemical has wide-ranging applications in automotive, sports consumer electronics, 3D printing, additive manufacturing, bio-textiles, and medical – sectors that are growing across Asia.
Previously, Arkema was making polyamide 11 only at its plant in Marseille, France. The product sold to European, North American, and Chinese markets. The French factory will continue to operate but the Singapore factory was built squarely to serve the Asian market.
Arkema has had a footprint in Asia for over three decades, starting in China in 1984. Its research centre in Changshu remains its largest in Asia. It produces partially biobased curable resins from a plant in Foshan.
One of Arkema’s strategic pillars is to increase its share of revenue coming from biobased products, dedicating much of its R&D to biobased alternatives. This is a realistic goal for a company that, for several years, has been making 10% in revenues from materials with 25% or more biobased content. Its expertise in castor oil derivatives has been key to this.
Asian expansion is key to this biobased revenue push. The Singapore plant is close to local markets for speciality chemicals and nestles within competitive, local supply chains – the company sources its castor oil from Indian farms.
The Asian investments support not just Arkema’s biobased strategy but also its overarching aim of achieving a geographically balanced revenue stream. In 2024, its sales by value were almost evenly split between North America (35%), Europe, (33%), and Asia (27%). This approach mitigates the risks of concentrating solely on one market.
Covestro
Covestro has held capacity in Asia for some time and in 2024, their APAC sales were 34% of the total.
The firm continues to commit to the region, particularly China, to get closer to raw materials and markets. Covestro launched partly biobased coating raw materials from its plant in Guangdong in 2024. The company also holds capacity in Zuhai, It also makes products with biobased or biocircular content from its Shanghai plant, which it completed constructing in 2023.
Covestro’s CEO is adamant that Asia and China are lucrative opportunities for the company. Dismissing talk of market saturation in the region, he stated that 75 per cent of Covestro’s planned investment in the Asia-Pacific region will be in the country between 2024 and 2027.
R&D is another component of its Asia strategy. In 2024, Covestro signed a cooperation agreement with Chinese firm Maysta and the Institute of Chemical Industry of Forest Products to develop bio-based polyurethane. The following year saw a partnership between Covestro and Japan’s Nippon Paint to develop lower-carbon performance coatings for automotives and industry.
Returning home?
Global chemicals contribute around 5-6% of total emissions. Yet its supply chains are notoriously difficult to decarbonise. This presents a major opportunity for established chemicals firms, who know that scaling effective low-carbon solutions could reap big returns.
Asia offers companies a fighting chance to achieve dominance in the renewables economy. In fact, for large chemical companies, ramping up biochemicals has become almost synonymous with expanding their presence in Asia.
The question is whether Europe can entice companies to do the same back home. The EU sorely needs big players to build domestic biobased capacity, now that biomanufacturing is part of its defence, economic competitiveness, resource security goals.
One thing going for the EU’s biochemicals industry is the rising number of regulations locking in demand for renewable chemicals. Yet it is still uncertain whether the region will meet this demand with domestically manufactured goods or whether their dependence on Asian and North American imports will grow.
The EU is trying to boost investment into domestic biobased capacity using policy. A new EU bioeconomy strategy and a Biotech Act both aim to convert the region’s abundance of R&D and startups into industrially scaled production. Everything will depend on how well the EU converts policy roadmaps into effective industrial stimulus – something that will become clearer over the next five years.
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