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Covestro Maintains Pause Over its MDI-500 Project in Texas

Covestro Maintains Pause Over its MDI-500 Project in Texas

  • 25-Mar-2021 10:00 PM
  • Journalist: Robert Hume

The German chemical manufacturer, Covestro AG has maintained the ‘On Hold’ status for its USD 1.7 billion investment in Baytown, Texas. The mega plan which was announced in 2018 has been paused for indefinite period since January 2020 for nearly 18 to 24 months due to challenging market conditions and other macroeconomic factors.

As confirmed by a company official, it is adhering to the pause in commissioning of its world-scale MDI-500 project. The long halt is a part of Covestro’s investment procedures, wherein it regularly reviews its capex plans against constantly changing economic and market conditions.

The company’s North American body is mainly based in Pittsburgh, but it is continuously working to fastening its presence in Baytown. The “Baytown MDI-500” project was a part of Covestro’s cost-effective Capex plan to tap the long-term growth potential of Methylene Diphenyl Diisocyanate (MDI) and provide reliable product supply to its end customers located in the area. The company noted that leading cash costs and better access to required infrastructure and logistics would serve well in expanding its business footprints in Baytown.

The project involves the installed capacity of about 500 KTPA Methylene Diphenyl Diisocyanate (MDI), a key raw material for the production of energy-efficient insulations used in buildings and refrigeration devices. Being a global leader in Polyurethane products, Covestro maintained MDI capacity share of about 19% in 2020 and is among top 5 global producers of MDI.

The global MDI market is expected to grow by about 5.5% annually. The main market drivers include increasing demand for energy efficient insulation solutions in both construction and automotive sectors.

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