Covestro AG (Leverkusen, Germany) announced a strategic methylene diphenyl diisocyanate (MDI) investment program to reinforce its global leadership position and strengthen long-term supply security for customers worldwide. The program includes preparations for a new MDI production train with 660,000 metric tons per year (m.t./yr) capacity at the Covestro Integrated Site Shanghai in China, with start-up targeted for the end of the decade. In addition, Covestro is conducting a feasibility study for a plant of similar scale in the United Arab Emirates. Both initiatives reflect Covestro’s long-term growth ambitions in the global MDI market. The projects are supported by XRG and highlight the benefits of its global chemicals platform – enabling integrated value chains and strengthening supply resilience across regions.
“This investment program is a clear commitment to our customers and to our long-term growth in the MDI market,” said Dr. Markus Steilemann, Chief Executive Officer of Covestro. “We see strong and sustained demand, and at the same time increasing requirements for supply reliability. With these planned investments, we are strengthening our ability to serve our customers at scale while leveraging our technology and operational strengths. XRG’s long-term commitment provides the right foundation to execute these projects and enables us to leverage integrated value chains, strengthen supply resilience and compete at a global scale.”
Long-term demand for MDI (methylene diphenyl diisocyanate), a key raw material for polyurethane rigid foams, is expected to grow globally, driven by multiple applications: building & construction (energy-efficient insulation), appliances (food chain efficiency and sustainability-driven modernization), and sports and lifestyle applications – particularly in Asia and the Middle East. At the same time, demand growth is projected to outpace capacity additions, increasing the importance of reliable, large-scale supply. Covestro is one of the world’s leading MDI producers with production sites in Europe, Asia, and North America.
Covestro is preparing to expand its existing site in China with a new MDI production train. In addition to the main MDI unit, the investment includes upstream plants and supporting infrastructure to manufacture key intermediates on site, creating an integrated production setup. The facility will use the proprietary MDI AdiP technology, which significantly reduces energy consumption. Overall, the new MDI train is designed to operate with net-zero greenhouse gas emissions (Scope 1 & 2).
“Our Covestro Integrated Site Shanghai combines strong reliability with proven capabilities in delivering complex projects,” said Dr. Thorsten Dreier, Chief Technology Officer of Covestro. “The new MDI train will improve overall production efficiency and underlines our ambitions to reach operational climate neutrality. This is also achieved thanks to our proprietary AdiP technology, which has been successfully demonstrated at industrial scale in Germany.”
The feasibility study for a potential new MDI production facility in the United Arab Emirates will assess synergies within the emerging ecosystem in Al Ruwais Industrial City, building on the previously announced partnership with TA’ZIZ and Fertiglobe. A globally oriented facility of this scale would complement Covestro’s local-for-local production approach and strengthen supply security for customers across all regions.
The assessment will consider access to energy from renewable sources and the integrated industrial platform of the TA’ZIZ chemicals hub, including reliable local supply of key raw materials such as chlorine and ammonia. A potential investment would build on the project blueprint from Shanghai.
Both initiatives reflect Covestro’s ambition to pursue long-term growth opportunities in the global MDI market with discipline and focusing on sustainable value creation. As Covestro’s strategic investor, XRG brings a long-term investment perspective and global platform view to this next phase.
“The planned expansion in China and the feasibility study in the UAE show how we are targeting opportunities to strengthen supply resilience, enhance competitiveness and support customers over the long term”, Steilemann added.