China’s Wanhua Plans MDI Complex in Louisiana

12.04.2017 -

China’s Wanhua Chemical has announced it will build a $1.12 billion isocyanates complex in the US state of Louisiana, benefiting from a $4.3 million infrastructure grant from the state's economic development arm and access to cheap shale gas-derived feedstock. The Chinese group is also expected to leverage the state's Industrial Tax Exemption, which exempts manufacturers from paying local property taxes for up to 10 years.

Wanhua, regarded as world’s largest producer of MDI, plans to invest $954 million in the facility, with unnamed project partners contributing $166 million. A decision on where to build is expected to come later this year. Capacities have not been disclosed. The company said one of its reasons for selecting Louisiana was the deep-water transportation provided by the Mississippi River.

The US state’s economic development secretary, Don Pierson, said he expects additional Chinese investment, including more projects by Wanhua and Yuhuang. “I think that we have every reason to believe that we’ll see more investment from China. I think it’s in compliance with what the (Trump) administration is trying to encourage: made in America,” Pierson told the New Orleans newspaper Times-Picayune. “Projects like this help our trade balance, producing commodities they own and likely ship back to their markets,” he said.

The agreement between the Chinese company and the state government climaxes more than three years of negotiations. The investment will be the second largest by a Chinese chemical producer in Louisiana – Yuhuang Chemical is currently building a $1.85 billion methanol complex in the state, which ranks third among US states for the most foreign direct investment from China. New York and California are in the first two slots, though most projects there do not involve manufacturing.

As late as March of this year, 294 shale gas-related chemical projects valued at $179 billion had been announced for the US, according to the American Chemistry Council, which represents chemical producers. The figures show that around 62% of the total investment comes from companies based outside the US.

With the exception of LNG export terminals, most of Louisiana’s petrochemical projects involve foreign companies. Biggest investors, according to the Times-Picayune, are South Africa’s Sasol, which is building an ethane cracker outside Lake Charles expected to cost nearly $9 billion, and Taiwan-based Formosa Plastics, which is spending $9.4 billion on projects in St. James Parish.

Other plans are said to include a $1.4 billion ethylene plant being built by Japan’s Shintech in Iberville Parish, a $1.5 billion facility in St. John Parish by Russian fertilizer maker EuroChem, a $2 billion investment by Canada-based Methanex in two methanol plants in Geismar and a $717 expansion of Shell Chemical’s site at Geismar. Additionally, Lotte Chemical is planning a $1.1 billion monoethylene glycol plant in Lake Charles and is partnering with Axiall on a $1.9 billion ethane cracker at the same site.