Active in E-Commerce: BASF Conducts First Internet Auction for Raw Materials Purchasing.

Business Editors

LUDWIGSHAFEN, Germany--(BUSINESS WIRE)--March 3, 2000

BASF, expanding its range of opportunities in purchasing raw materials, has held its first Internet auction based on the "reverse bidding" method to purchase several thousand metric tons of methanol. The on-line event, which was conducted by BASF's Raw Materials Purchasing division, yielded substantial savings for the company.

"The use of virtual marketplaces and Internet auctions is an important part of our strategy for optimizing procurement," said Wolfgang Moerike, President of BASF's Raw Materials Purchasing division. "I believe that a large proportion of our business will soon be handled this way."

Raw Materials Purchasing had informed seven methanol suppliers of its auction on the virtual trading floor of the Internet auctioneer "Portum." The auction was held on Wednesday, March 1, between 9:30 a.m. and 1:45 p.m. Central European Time. The auction became very exciting during the final hour when five raw materials suppliers still remained and were undercutting one another's bids at five-minute intervals. The bids eventually fell to approximately 10 percent below the current market price, and the contract was awarded to a supplier who significantly reduced his bid in the auction's final moments.

Raw Materials Purchasing is also extending this virtual form of purchasing to other suitable products. The division normally engages in individual negotiations with all potential suppliers. The on-line auction eliminates this step, leading to considerable cost savings.

In the field of global raw materials purchasing on the Internet, BASF is working closely with ChemConnect Inc. in San Francisco, California. ChemConnect is BASF's preferred partner in its strategy to develop the Internet as an environment in which to purchase raw materials.

Methanol is one of the most important raw materials in the chemical industry and, as an indispensable base product, plays a central role in many value-adding chains. BASF's total annual methanol production capacity is 450,000 metric tons but the company also purchases considerable amounts of this product from outside suppliers.

BASF is a return-focused global company generating long-term growth and profitability from its activities in chemicals, health and nutrition, and oil and gas. The company's product range includes high-value chemicals, plastics, dyestuffs, dispersions, automobile and industrial coatings, crop protection agents, pharmaceuticals, fine chemicals, crude oil and natural gas.

BASF's approach to integration, known in German as "Verbund," is one of the company's particular strengths and provides a unique competitive advantage. With sales in 1998 of E27.6 billion (about $29 billion) and a workforce of 105,000 employees, BASF is one of the world's top chemical companies. BASF's Internet address is www.basf.com.

A photo is available by calling [phone]