German Firm Covestro Announces New Investment in Shanghai

German chemical firm Covestro announced on Tuesday that it will increase investment in Shanghai for new facilities producing methylene diphenyl diisocyanate (MDI), as a core part of a program to reinforce its global leadership and strengthen long-term supply security for customers worldwide.

To meet increasing demand for MDI, a key raw material for polyurethane rigid foams, which are excellent insulation materials and used in buildings and refrigerators, the investment at Covestro's Shanghai integrated production site includes the main MDI unit, upstream plants and supporting infrastructure to manufacture the key intermediates on site.

The annual capacity of the new MDI production assembly line is expected to reach 660 kilotons, with startup targeted for the end of the decade.

Covestro did not disclose detailed investment figures, but it typically costs between 1.5 billion euros (US$1.7 billion) and 2 billion euros, making it a major foreign investment project in Shanghai in recent years.

Holly Lei, senior vice president of Covestro and president Covestro China, said the investment is a "powerful testament" to the company's long-term commitment to the Chinese market, which is made against the backdrop of a challenging global environment.

"We have always had strong confidence in China. Its highly integrated industrial ecosystem, vibrant innovation capacity, and deep talent pool together create a competitive advantage that is truly unique on the global stage," Lei added.

Covestro is also conducting a feasibility study for a plant of similar scale in the United Arab Emirates. Both initiatives reflect Covestro's long-term growth ambitions in the global MDI market, the company said in a statement.