Covestro Invests €1.5 Billion in US MDI Plant
Covestro has announced its intention to spend €1.5 billion on a new world-scale MDI plant in Baytown, USA. The project represents the largest single investment in its history, the German group said.
The proposed unit, which is expected to go online in 2024, will have a capacity of 500,000 t/y, taking Covestro’s production in the NAFTA region to around 740,000 t/y. The company will close an older MDI plant of 90,000 t/y, although it did not disclose this plant’s location.
“Demand for innovative MDI materials will continue to grow for the foreseeable future and likewise promises attractive capacity utilization rates,” said CEO Markus Steilemann.”With the new MDI train in Baytown, we will further strengthen our global leading position in polyurethanes, even better serve our customers and create long-term shareholder value.”
Covestro said it chose Baytown after thoroughly analyzing different options. The US site’s main advantages included the attractiveness of the domestic market, a superior cash position driven by economies of scale and a high degree of vertical integration as well as significant benefits in terms of available infrastructure and logistics.
The company added that its future North American capacity will catch up with its planned capacities in Europe, Middle East & Africa, which will reach 820,000 t/y by 2022, and in Asia-Pacific, which will reach 670,000 t/y by 2021.
Covestro is currently doubling MDI capacity at Brunsbüttel, Germany, to 400,000 t/y, which is due on stream in the second half of 2019, as well as expanding output in Tarragona, Spain, by 50,000 t/y to 220,000 t/y by 2022.
It is also debottlenecking its MDI complex at Caojing, near Shanghai in China, in two phases, taking total output to 600,000 t/y by early 2021.
According to Covestro, the global MDI market is expected to grow by about 5% annually in the long term, outpacing global GDP by about 2 percentage points and requiring roughly one new world-scale plant every year.