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October 09, 2018 12:00 AM

500 kT/year more MDI for Covestro in Baytown

Simon Robinson
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    Baytown, Texas – Covestro's board today approved EUR 1.5bn to build 500 kT/year MDI capacity at its site here, taking its NAFTA MDI capacity to 740 kT/year.

    Steilemann

    This is the largest single investment in the history of the company. Production is expected to start in April 2024. While expanding, the company is also taking the opportunity to shut a small 90 kT/year plant at the site.

    Covestro said the expansion will make it 'industry capacity leader in the region by 2024.

    ' When it is onstream, Baytown will 'strongly underline its global industry capacity leadership position', the company added.

    'Demand for MDI will continue to grow for the foreseeable future and likewise promises attractive capacity utilisation rates. We have already announced a significant increase in capital expenditures. Now it it's time to put it into action', said CEO Markus Steilemann.

    Covestro's, CFO is Thomas Toepfer. He said that 'even with all capacity increases announced, the projected supply is not sufficient to balance expected demand growth'. He added that the new plant would be at a high utilisation rate 'soon after the start-up'. This will make the investment 'highly efficient'.

    The Baytown site is large and vertically integrated, making cash costs low. Additionally, it has good infrastructure and is surrounded by a fast-growing market. This combination reduces delivered costs to the local market .

    Earlier in the year, Covestro announced that capacity in Brunsbuttel, Germany will doubled from 200 to 400 kT/year in the second half of 2019.

    Covestro said the global MDI market is growing at around 5%/year and the rigid polyurethane insulation market, which is based on MDI is also growing strongly.

    Earlier in the summer, the company announced plans to raise MDI capacity Shanghai from  500 to 600 kT/year in two stages.

    The Baytown announcement is part of a plan that sees additional capacity in Brunsbuttel, Germany and Tarragona, Spain and could see Covestro capital expenditure reach EUR 1.2bn over the next three years

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