German polyurethanes heavyweight Covestro (Leverkusen; www.covestro.com) has once again delayed plans for a world scale MDI plant to be built either in the US or China.

In communicating the newest delay on 7 November 2022, the company said a decision on where to build the 500,000 t/y facility has still not been taken. A spokesperson told Plasteurope.com that the entire project will be re-evaluated when the economic environment improves.

In 2018, the German engineering plastics producer announced plans to build the facility at its Baytown, Texas, site on the US Gulf Coast. At a cost of EUR 1.5 bn, this would be the largest single investment in its history (see Plasteurope.com of 11.10.2018), it said. Start-up was pencilled in for 2024.

The mammoth project was first postponed in January 2020, then revived in September 2021 (see Plasteurope.com of 30.09.2022). After the first suspension, shortly before the global coronavirus pandemic outbreak, Covestro pointed to “challenging market conditions”.

Reviving the plans in autumn last year, CEO Markus Steilemann hinted that the decision to build in the US could be revisited, with China now also in the running. He also named a new start-up date of 2026. In a German interview near year’s end, the Covestro chief predicted a strong surge in demand for MDI, led by the growing demand for energy-efficient construction (see Plasteurope.com of 17.12.2021).

Reasons for reconsidering the location, a spokesperson told Plasteurope.com at the time, included “changed parameters for construction and personnel costs, regulatory requirements and technological aspects”.

The latter consideration was said to pivot on how and where the plastics producer’s own AdiP technology, which it said allows “significant savings” in electricity and steam consumption at production facilities in Brunsbüttel, Germany, could be better implemented at existing locations.

Unwrapping the latest change of plans this week, Steilemann cited an “increasingly volatile economic environment” marked by the war in Ukraine, the European energy crisis and growing inflation – which he said have “severely disrupted the global economy”.

Nevertheless, the CEO stressed, “In the long term, we see significant growth in global demand for MDI, driven by trends toward energy-efficient construction, and want to profit from this demand as a leading company in the global market. We will also continue to invest in growth opportunities in all regions of the world.”

Chief financial officer Thomas Toepfer added that before pushing the investment back again, management took a closer look at the company’s general capital spending budget, in particular the need to expand production elsewhere and invest in the transition to a circular economy.

Covestro said earlier it aimed to invest around EUR 1 bn in circular economy projects over the next decade.

The suspension of the MDI project does not represent a change in the business’ long-term growth strategy, executives insist. This especially as China and Asia-Pacific remain strong key growth markets for the German player, the world’s third largest with capacity of 1.7 mn t/y.

PIE’s Polyglobe database (www.polyglobe.net) shows that Covestro currently can produce 600,000 t/y of MDI in Germany, at two same-sized plants in Brunsbüttel and one in Uerdingen. Its Tarragona, Spain, site has capacity to turn out 170,000 t/y, with a 50,000 t/y expansion through debottlenecking slated to go onstream sometime this year.