The long-term growth prospects of the MDI market are positive and attractive.
500,000 tons/year new plant will meet market demand and boost industry growth
MFT capacity in NAFTA will reach 740,000 tons/year by the end of 2024
Expand Covestro's leadership in the region and global MDI market
To capture the strong growth of the diphenylmethane diisocyanate (MDI) market, Covestro is accelerating its investment activities. Today, Covestro's Supervisory Board approved a €1.5 billion investment plan to be built in Baytown, USA. A world-class MDI plant. This investment will be the largest single investment in the company's history. The new plant will be located in the existing Covestro Baidon base. The new production line capacity is 500,000 tons / year, production is expected in 2024 At the same time, Covestro will shut down an older and relatively inefficient MDI unit with a capacity of 90,000 tons/year. Thus, by 2024, Covestro will be in the NAFTA region (USA, Canada and Mexico). MDI's total production capacity will reach approximately 740,000 tons / year, which will become the largest MDI producer in the region. Covestro will also enhance its global capacity leadership.
'For the foreseeable future, the market demand for innovative MDI materials will continue to grow, and capacity utilization is therefore expected to remain at an attractive level. We have previously announced that it will significantly increase capital expenditures, now it is time to pay them Actions. ' Dr. Markus Steilemann, CEO, said, 'With the new Baytown MDI line, we will further strengthen our global leadership in polyurethanes, better serve our customers and create long-term shareholder value. . '
Attractive MDI market prospects
In the long run, the global MDI market is expected to grow at an average annual rate of about 5%, which is about 2 percentage points higher than global GDP growth. More and more areas are using MDI to replace other poorly performing and less sustainable materials. As part of the global megatrend, the market is increasingly demanding energy-efficient insulation solutions, which have become the key drivers of MDI market growth. MDI is the precursor of rigid foam, rigid foam insulation performance Good, widely used in buildings and refrigerators. To meet the expected growth of global MDI market demand, it is necessary to build a world-class factory every year.
Although Covestro has begun to expand its MDI production facility in Bloomsbit, Germany, it plans to double production to 400,000 tons/year in the second half of 2019, but strong market demand is bringing more significant market opportunities. Therefore, as part of the company's previously announced plan to increase annual capital expenditures to 1.2 billion euros over the next three years, the new MDI investment will help Covestro maintain and consolidate its leadership position and support further profitable growth. In addition, Covestro plans Further leverage its technology and innovation capabilities as well as leading cost levels.
Capital expenditures focus on cost-effectiveness and excellent return on investment
Dr. Thomas Toepfer, Chief Financial Officer, explained: 'Even if all announced expansion plans are taken into account, the future supply of the industry is still insufficient to fully meet the expected growth in demand. Therefore, we are confident that we will be new. After the production line is started, the capacity utilization rate will soon reach a high level and achieve efficient investment. The project will be based on our existing infrastructure and process technology, and will become a model for our investment approach focusing on value creation.
Covestro's global MDI investment programs follow a cost-effective capital expenditures program that leverages existing infrastructure and supply networks to achieve lower dedicated investments and higher return on capital (ROCE). Other projects under the investment plan include: continuation of production at the Tarragona base in Spain, expansion of production facilities at the China base, and investment in the Antwerp base in Belgium.
Baytown - the ideal choice for the new factory
Before deciding to choose Baytown to build a new world-class factory, Covestro conducted a comprehensive analysis of different candidate locations. In addition to the attractive local market, the Baytown base also has leading cash cost levels in existing infrastructure. And logistics also has obvious advantages. Its superior cost position is mainly due to economies of scale and vertical integration. In addition, the lower energy and transportation costs in North America are also one of the reasons for Betten's selection. After the new plant was put into production in 2024, Sitron's MDI capacity in North America will reach 740,000 tons/year, catching up with the company's future production capacity in EMEA (Europe, Middle East, Africa and Latin America except Mexico) and Asia Pacific. Covestro's MDI capacity at EMEA It is expected to reach 670,000 tons/year in 2021. Its MDI capacity in Asia Pacific is expected to reach 820,000 tons/year in 2022.