BASF to consider Chongqing for second MDI plant

PUBLISHED : Wednesday, 13 June, 2007, 12:00am
UPDATED : Wednesday, 13 June, 2007, 12:00am

BASF, the world's biggest chemical producer, has selected Chongqing as a possible site for its planned second plant to make raw materials for polymers used in the vehicle and construction sectors, to facilitate its expansion in the western China market.

The German firm said it had signed a memorandum of co-operation with state-owned Chongqing Chemical and Pharmaceutical Holding (Group) to evaluate the merit of the site for a 400,000 tonnes a year diphenylmethane diisocyanate (MDI) plant planned to start-up in 2010.

The plant would give a significant boost to BASF's global annual MDI output capacity of 1.16 million tonnes.

BASF would not give the plant's estimated cost. Its 240,000 tonnes a year MDI plant and 160,000 tonnes a year toluene diisocyanate (TDI) plant in Caojing near Shanghai, came on stream last August at a total investment of US$1 billion. MDI is a raw material for making TDI.

Both are basic materials for the production of polyurethanes, polymers used in the automotive and construction industries, as well as in refrigerators and footwear. Economically less developed than the coastal regions, Chongqing is nevertheless undergoing rapid industrialisation and urbanisation.

A BASF spokeswoman said Chongqing was only a possible site for the project, although its easy access to competitive raw materials and energy was an advantage.

MDI is made from benzene, a derivative in the cracking process of crude oil and natural gas.

PetroChina plans to build a 10 million tonnes a year oil refinery and an 800,000 tonnes a year petrochemical plant in Chengdu.

BASF Asia Pacific head Martin Brudermuller, in an interview last July, said the company was studying expansion in western China as it needed to 'move closer to customers and the end of the value chain'.

Chongqing is home to the mainland's fourth-largest car maker, Changan Automobile, and the largest privately owned motorcycle maker, Chongqing Lifan Holdings.

BASF last year paid US$5.4 billion for US-based auto pollution abatement device and catalysts producer Engelhard, and Euro2.7 billion for German chemical major Degussa's construction materials business.

In December last year, BASF also struck a deal to buy Guilin REEcat Catalyst, a motorcycle emissions-control catalyst maker based in Guilin, Guangxi province.

Rising output

BASF's global annual MDI capacity after the new plant is opened, in tonnes: 1.16m