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.