, is shifting the headquarters of its global polycarbonate activities from the company HQ in Germany to Shanghai. The company is investing more than €3 billion in its Shanghai facility on a number of projects, with at least a third of that in its plastics, coatings and adhesives business unit.
Bayer's polycarbonate (PC) is marketed under the Makrolon brand name. This new €1 billion in announced capital expenditures for Bayer's Shanghai plant will significantly expand the company's polyurethane (PUR) and PC capacities in China, as the supplier aims to increase its group sales in Greater China to around €5 billion by 2015. About half of those sales are to be driven by its MaterialScience group, the name for its plastics, adhesives and coatings business. To put that in perspective, Bayer MaterialScience's total FY 2009 sales were €7.5 billion, of which Greater China sales were €2.1 billion. The MaterialScience unit accounted for €1.2 billion.
Among projects green-lighted with the investment will be a more-than-doubling, to one million tones/yr, of its capacity there for the polyurethane precursor material, methylene diphenyl diisocyanate (MDI). Also, capacity for PC will increase to 500,000 tonnes per annum from the current 200,000 tonnes/yr at the Shanghai site.
The company said its investment also would be used to significantly strengthen its research and development activities in China, and fund the move of the headquarters of its PC business unit from Leverkusen, Germany to Shanghai. "The expansion of our capacities in China is an important step in strengthening our presence in the emerging economies," stated Bayer AG's management board chairman, Marijn Dekkers. Added Patrick Thomas, CEO of Bayer MaterialScience, "For us, it is strategically important to hav
e the necessary capacities in the Asia/Pacific region to meet constantly rising demand."
In terms of sales, China is the second most important country in the world for Bayer MaterialScience, behind the U.S. and ahead of Germany. The company already had announced a €2.1 billion investment in Shanghai as part of a long-term project lasting until 2012. Together with the newly announced expansions, this means a total investment of more than €3 billion. Five separate projects are planned to increase production capacity at the Shanghai Chemical Industry Park. For PC, a new facility is scheduled to be built with a capacity of 200,000 tonnes/yr, and the capacity of the existing PC plant there will be increased by 100,000 to 300,000 tonnes/yr. According to Bayer the Asia/Pacific region currently accounts for around 60% of the world's total polycarbonate market, with the greatest demand coming from China. The plastic is used predominantly in the automotive, electrical and electronics, and construction industries.
In addition to the new MDI plant with an annual production capacity of 500,000 tonnes, it also intends to expand the capacity of its present MDI facility from 350,000 to 500,000 tonnes/yr. Also planned is an investment in HDI production. HDI is used to make high-quality surface coatings. There are plans to expand the capacity of the existing HDI production to meet short-term market demand and the addition of another further 50,000-tonnes/year HDI facility is also planned.
These announcements come on the heels of the recent news that Bayer plans to invest by 2012 about €110 million in PC compounding, PC sheet extrusion and PUR systems houses in China.