Shanghai, China


Bayer is building an enormous plant for polyurethane coating raw materials in Caojing near Shanghai in the People's Republic of China. The project is part of a $3.1 billion integrated polyurethane and engineering plastic complex which is expected to be fully operational by 2008. The project combines several individual production facilities to a network sharing infrastructure, raw materials and technologies

POLYURETHANE PLANT

The construction of the new production site in Shanghai is meant to establish a strong manufacturing base in the People's Republic of China which is one of the principal growth markets in Asia (Asia polyurethane markets, excluding Japan, are growing by more than 10% per year, to reach 2.24 million tonnes per year in 2004, up from 1.35 million tonnes per year in 1999).

Bayer's $110 million investment in the production of polyurethane coating raw material is planned to be a large-scale production facility. These investments are Bayer's response to the continuing rapid increase in global demand for the raw materials used in high-performance polyurethane coatings which has been brought about by increasing quality requirements in applications such as automotive finishing, plastic coatings, and wood and furniture finishing.

CONSTRUCTION TIMESCALE

The project was announced in May 2001 and construction began in November, with completion estimated for 2006. The first phase of construction will become operational in 2003. The second phase will see the construction of a production plant for the HDI precursors.

The latest part of the project will also complement the 30,000t/yr plant already under construction and expected on-line in 2002 at Leverkusen, Germany.

POLYISOCYANATES

The new plant will be built at a cost of $110 million. The first phase of construction will create 11,500t/yr of capacity for TDI- and HDI-based (toluene and hexamethylene diisocyanates) polyisocyanates, with expansion to 20,000t/yr planned for the medium term. The capital expenditure for this first phase will amount to $50 million. The second phase will involve the construction of production facilities for the HDI precursor, at an additional cost of $60 million.

INTEGRATED CHINESE DEVELOPMENT

The polyurethane facility is part of a massive project expected to be fully operational by 2008. The project was first envisaged in 1999, with the signing of a memorandum of understanding with the Chinese government. The massive site will be Bayer's largest ever investment in a single project ($3.1 billion). The final agreement was signed between Bayer and the Shanghai Chemical Industry Park Company Ltd in October 2001.

Together with the polyurethane coating raw materials, also included in the integrated chemical facility are 100,000t/yr polycarbonate plant, and the plan to build units for manufacturing isocyanate raw materials. The timeframe for those projects will be closely co-ordinated with the relevant Chinese authorities and will also depend on the development of the products markets.

The fully integrated plastic complex is expected to become the stronghold for Bayers' further expansion in the Asian market.

APPLIED POLYMER TECHNOLOGY SERVICE CENTRE

To support its business activities in the field of polyurethane, plastics and coating raw materials, the company has also opened in Shanghai a $10 million technical service centre for applied polymers technology.

The company says that the facility will provide optimal support for its customers in that country. The technical centre will complement Bayer's plastic production in China and provide a customer interface for the company's planned integrated chemical site at Shanghai Chemical industrial park in Caojing.

Bayer believes that the technical centre to support its market activities together with the new plant will boost the sales in the Asian market to 25%, up from its current share of 10%.