German Firm Covestro to Build $1.7B MDI Plant in TexasGerman Firm Covestro to Build $1.7B MDI Plant in Texas

German polymers and materials manufacturer Covestro revealed plans on Tuesday to invest €1.5 billion (about $1.7 billion) in the construction of a new production plant for methylene diphenyl diisocyanate (MDI) in Baytown, TX. The company said the project represents its largest investment in its history. 

Some 500 kt/yr of MDI will be produced at the site when the new facility becomes operational in 2024, raising the company’s total capacity for MDI in the NAFTA region to about 740 kt/yr. 

“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,” Covestro Chief Executive Officer Dr. Markus Steilemann said in a statement. “With the new MDI train in Baytown, we will further strengthen our global leading position in polyuruthanes, even better serve our customers and create long-term shareholder value.”

Because the global MDI market is forecasted to grow at a rate of about 5% annually over the coing years, Covestro is actively investing in expanding MDI production across its footprint. In 2019, the company will double the MDI capacity of its Brunsbuettel, Germany facility to 400 kt/yr. The company also plans to boost the capacity of its MDI plants in the APAC region to 670 kt/yr by 2021. 

“Even with all capacity increase announcements considered, the projected industry supply is not sufficient to fully balance the expected demand growth. We are therefore confident that we will reach high utilization rates of our new capacities soon after the start-up, making the investment highly efficient,” said the firm’s chief financial officer, Dr. Thomas Toepfer, in a company press release. “Building on existing infrastructure and processes, it will be a prime example of our value creating investment approach.”

MDI is used as an precursor in polyurethanes, including rigid foams.

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