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Covestro to invest €1.5 billion in new, world-scale MDI plant in Baytown

By Gerald Ondrey |

????????Covestro AG (Leverkusen, Germany; www.covestro.com) accelerates its investment activities to capitalize on the strong methylene diphenyl diisocyanate (MDI) market growth. Today, the Supervisory Board of Covestro has approved an investment of around €1.5 billion to build a new world-scale MDI plant in Baytown, Texas. This investment at the existing site in Baytown (photo) is the largest single investment in the history of the company. Total capacity of the new train will be 500,000 ton/yr of MDI, start of production is expected in 2024. At the same time an older, less efficient MDI unit of 90,000 tons production capacity will be closed. Thus, total MDI capacities of Covestro in the NAFTA region will reach around 740,000 ton/yr, making Covestro the industry capacity leader in the region by 2024. With that, Covestro will also strongly underline its global industry capacity leadership position.

“Demand for innovative MDI materials will continue to grow for the foreseeable future and likewise promises attractive capacity utilization rates. We have already announced a significant increase in capital expenditures, now it’s time to put it into action”, says 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.”

The global MDI market is expected to grow by about 5% per year in the long-term, outgrowing the world’s global domestic product (GDP) by about 2 percentage points. Key MDI market drivers include the substitution of less performing and less sustainable materials as well as global megatrends such as an increasing demand for energy efficient insulation solutions. MDI is a precursor for rigid foam, which is an excellent insulation material and is used, for example, in buildings and refrigerators. The expected global MDI demand growth translates into the need for approximately one additional world-scale plant per year.

Although Covestro is already doubling its MDI production capacity in Brunsbuettel (Germany) from 200,000 to 400,000 ton/yr in the second half of 2019, the strong growth in demand creates further significant market opportunities. Therefore, the investments — which are part of the already announced investment increase of up to € 1.2 billion per year for the next three years — will help Covestro to maintain and strengthen its leading position and support further profitable growth. Moreover, Covestro aims at further capitalizing on its technical and innovation capabilities as well as on its leading cost position.

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