Covestro suspends plans for “world-scale” MDI facility again

Leverkusen, Germany – Covestro AG has suspended, for a second time, plans to construct a “world-class” facility for the production of methylene diphenyl diisocyanate (MDI), an essential building block for polyurethanes.

In a 7 Oct statement, the German supplier cited weak global economy as the reason behind its decision to halt the project, stating that the plant’s future location will remain unknown until further notice.

"The war in Ukraine, the European energy crisis and the growing inflation have severly disrupted the global economy,” explained chief executive officer Dr Markus Steilemann.

“Facing an increasingly volatile economic environment, we must ensure that we make the best decision for the company economically and strategically,” he added.

According to Steilemann, Covestro still sees significant growth in global demand for MDI over the long-term, driven by trends toward energy-efficient construction.

“[We] want to profit from this demand… [and] will also continue to invest in growth opportunities in all regions of the world," he said.

Covestro initially announced plans to build the facility in Baytown, Texas in 2018, with operation scheduled for 2024.

In January 2020, the company halted the project due to “challenging global market conditions.”

In September last year, Covestro announced that it was resuming the project, with China and the US as the potential locations for the plant.

"We are facing unprecedented challenges that are shifting the global economic situation fundamentally,” explained CFO Dr Thomas Toepfer.

“This is why we took a close look at the world-scale project in line with our general investment process and, in view of the economic situation, decided to pause it,” he said in Covestro's latest announcement.

Covestro stressed that the decision did not represent a change in its long-term growth strategy.

“Especially China and Asia-Pacific remain strong key growth markets for Covestro in the long term,” it added.