Covestro to move forward with MDI expansion in US or China

LONDON (ICIS)–Covestro is to proceed with work on a world-scale methylene diphenyl diisocyanate (MDI) plant after suspending plans to build a unit in the US in early 2020, the Germany-headquartered firm said on Tuesday.

The producer had announced in January 2020 that it would halt work on its planned 500,000 tonne/year MDI plant at its Baytown, Texas, production complex, in the face of challenging global market conditions.

Work on a plant will move forward, Covestro CEO Markus Steilemann said on Tuesday, but the location is under review, with China mooted as a potential alternative to the US.

A decision will be announced at the next stage of project development, he added, with the plant expected to be commissioned in 2026, two years after the original forecast start date for the Baytown project.

The firm is also planning to expand its toluene diisocyanate (TDI) production by de-bottlenecking facilities in Dormagen, Germany, expected to be complete by 2023. The unit currently has a production capacity of 250,000 tonnes/year, according to ICIS data.

Also earmarked for investment are coatings and adhesives, and specialty films, with planned expenditure of €300m and €200m apiece by 2025, while the firm is planning more investment in the circular economy.

“In order to achieve our ambitious objectives and become fully circular, we are planning targeted capex spending of around €1bn on circular economy projects over the next ten years,” said Covestro CFO Thomas Toepfer.

Covestro is planning to increase capital spending over the next few years, with an estimated €800m of investment this year expected to expand substantially in the near future, according to Toepfer.

On the back of new investments, the realignment of the business into solutions and specialties and performance materials in mid-2021, and the acquisition of DSM’s resins and functional materials business, Covestro expects to increase mid-cycle earnings before interest, taxes, depreciation and amortisation (EBITDA) from €2.2bn to €2.8bn by 2024, the company added.

Front page picture: Covestro’s headquarters in Leverkusen, Germany
Source: Friedemann Vogel/EPA-EFE/Shutterstock