Covestro Puts MDI Expansion on Hold Again
Covestro is again putting on hold its previously announced plans to build a new 500,000 t/y plant for polyurethane precursor MDI.
At the beginning of this week, the German engineering plastics producer said market conditions and visibility were not strong enough to go ahead with the project first announced in January 2018, postponed in January 2020 and revived again in September 2021.
In the Nov. 7 announcement, CEO Markus Steilemann pointed to an “increasingly volatile economic environment” marked by the war in Ukraine, the European energy crisis and growing inflation, all of which “have severely disrupted the global economy.”
Longer term, however, Steilemann said the Leverkusen-based MDI producer, which ranks third in capacity globally, sees “significant growth in global demand, driven by trends toward energy-efficient construction.”
Steilemann and CFO Thomas Toepfer said the managing board is re-evaluating the investment in terms of how much of the capital spending budget should go to which projects, especially in view of its plans to transition to a circular economy. Covestro said earlier it planned to sink €1 billion into circular economy applications over the next decade.
In initially announcing the plans for the new MDI facility, the company said it would be built at its Baytown, Texas, complex on the US Gulf but later hinted that a Chinese site was also under consideration. The original start-up date was given as 2024, and later 2026 was named.
The latest suspension of the project, the two top executives said, does not represent a change in the business’s long-term growth strategy, adding that China and Asia Pacific remain key growth markets.
Speaking generally, Steilemann said this week that Covestro wants to invest in “growth opportunities in all regions of the world.”
Author: Dede Williams, Freelance Journalist
