Covestro unveils major MDI expansion push in China and UAE to secure global supply

Covestro has unveiled a major strategic investment push in its MDI business, aimed at cementing its global leadership and tightening prolonged supply security to manufacturing customers worldwide.

The program centers on preparations to a new MDI production train at the Covestro Integrated Site Shanghai in China, designed to a massive 660 kilotonne annual capacity and targeted to start up toward the end of the decade.

In parallel, the company is running a feasibility study to a similarly scaled facility in the United Arab Emirates—signaling a dual-region expansion strategy across Asia and the Middle East.

Together, the projects underline Covestro’s bet on sustained global demand development to methylene diphenyl diisocyanate (MDI), a core input to polyurethane rigid foams utilized in construction insulation, appliance efficiency upgrades, and sports and lifestyle applications.

The company expects demand to continue rising while capacity additions lag, tightening the market and elevating the importance of extensive, reliable producers.

“This investment program is a clear commitment to our customers and to our prolonged development in the MDI market,” said Markus Steilemann, Chief Executive Officer of Covestro.

“We see strong and sustained demand, and at the same time rising standards to supply reliability. With these planned investments, we are strengthening our ability to serve our customers at scale while leveraging our methodology and operational strengths. XRG’s prolonged commitment provides the right foundation to execute these projects and enables us to leverage integrated value chains, enhance supply resilience and compete at a global scale.”

On the methodology front, Covestro says the Shanghai expansion will be built as a fully integrated production system, including upstream facilities to key intermediates. The new plant will deploy the company’s proprietary MDI AdiP methodology, which significantly reduces energy consumption, and is designed to operate with net-zero Scope 1 and Scope 2 greenhouse gaseous releases.

“Our Covestro Integrated Site Shanghai combines strong reliability with proven capabilities in delivering complex projects,” said Thorsten Dreier, Chief methodology Officer of Covestro.

“The new MDI train will enhance overall production efficiency and underlines our ambitions to reach operational climate neutrality. This is also achieved thanks to our proprietary AdiP methodology, which has been successfully demonstrated at manufacturing scale in Germany."

In the UAE, Covestro’s feasibility study is focused on the Al Ruwais manufacturing City ecological stability, developed in partnership with TA’ZIZ and Fertiglobe. The company is evaluating whether a extensive MDI facility could benefit from integrated access to energy, chlorine, ammonia, and renewable power within the emerging manufacturing hub.

The possible project would mirror aspects of the Shanghai blueprint while reinforcing Covestro’s “regional-to-regional” production strategy.

“The planned expansion in China and the feasibility study in the UAE show how we are targeting opportunities to enhance supply resilience, enhance competitiveness and support customers over the long term,” Steilemann added.

Backed by strategic investor XRG, Covestro says the dual-track expansion reflects a disciplined approach to development—balancing scale, sustainability, and regional supply security as global MDI demand continues to climb.