Covestro to Close Tarragona MDI Plant

07.12.2015 -

Just weeks after its spin-off from Bayer, German engineering plastics producer Covestro has announced its first streamlining measure, saying it plans to close its 170,000 t/y MDI plant at Tarragona, Spain, by the end of 2107. Around 170 jobs will be eliminated in the move.

The former Bayer MaterialScience said it will retain the production site as a center for its polyurethane systems activities and a chemical park, in which no longer needed infrastructure will be made available to outside investors.

Joachim Wolff, head of the Polyurethanes business unit, suggested also that Tarragona could offer new opportunities for development as a hydrochloric acid logistics center for Spain.

Citing “non-competitive production costs” for its decision to close the MDI plant, Covestro said continuous optimization of its production structure worldwide – thereby focusing on its most efficient facilities – is a key component of its forward strategy.

The closure plans are said to have followed a detailed site analysis which concluded that in the long term the facility in Tarragona can no longer remain competitive as an MDI production facility in Europe in particular as it is not back-integrated into chlorine.

Covestro added that it will “most likely” expand production of MDI at another existing European site where there is already a modern and reliable supply of chlorine.

Stock listing in Germany’s MDAX

Two months after its initial public offering on the Frankfurt stock exchange, the former Bayer plastics sub-group will be included in the MDAX stock market index of Germany’s 80 leading companies from Dec. 21, 2015. The index is composed of 50 companies in the prime standard segment ranking just below the 30 companies in the blue-chip DAX.

Chief financial officer, Frank H. Lutz, said the listing “reflects the gratifying share performance and great investor interest since our flotation on Oct. 6 of this year. Membership in the MDAX will further enhance the perception of Covestro on the global financial markets.” The company’s share is now listed on all German stock exchanges, including the regional exchanges in Berlin, Dusseldorf, Hamburg, Hannover, Stuttgart and Munich.

Another former Bayer group company, Lanxess, is also listed in the MDAX, where it began life as a standalone company in 2005. Due to earnings pressure in the rubber business, the Cologne-based company was forced to leave the DAX, where it had been listed since 2013.