United States. Covestro reported that it is accelerating its investment activities to capitalize on the strong growth of the MDI (methylene diphenyl diisocyanate) market. The company announced a planned investment of around €1.5 billion to build a new global MDI plant in Baytown, Texas.
The investment in the existing baytown site is the largest single investment in the company's history. The total capacity of the new train will be 500 kilotons of MDI per year, and production is expected to begin in 2024. At the same time, an older and less efficient MDI unit of 90 kilotons of production capacity will be closed. With the expansion, Covestro's total MDI capabilities in the NAFTA region will reach around 740 kilotons per year, making Covestro the industry capacity leader in the region by 2024.
"The demand for innovative MDI materials will continue to grow for the foreseeable future and also promises attractive capacity utilization rates." We have already announced a significant increase in capital expenditures, now is the time to put it into practice," said CEO Markus Steilemann. "With the new MDI train in Baytown, we will further strengthen our global leadership position in polyurethanes, better serve our customers and create long-term shareholder value."
The global MDI market is expected to grow by around 5% annually in the long term, outpacing global domestic product (GDP) by about 2 percentage points. Key drivers of the MDI market include the substitution of lower-performance and less sustainable materials, as well as global trends such as the increasing demand for energy-efficient insulation solutions. The expected global growth in demand for MDI translates into the need for approximately one additional global scale plant per year.
Although Covestro is already doubling its MDI production capacity in Brunsbuettel, Germany, from 200 to 400 kilotons per year in the second half of 2019, strong demand growth creates significant new market opportunities. The investments, which are part of the already announced investment increase of up to €1.2 billion per year over the next three years, will help Covestro maintain and strengthen its leadership position and support more profitable growth. In addition, Covestro aspires to further capitalize on its technical and innovation capabilities, as well as its leading cost position.
