Company News
September 28, 2021
Covestro MDI Expansion Plans
Higher costs drive re-examination of Covestro MDI plant location plans – CEO
Author: Tom Brown
2021/09/28
LONDON (ICIS)–A significant increase in construction costs in the US has become a factor in Covestro moving to re-examine the potential location of its planned flagship methylene diphenyl diisocyanate (MDI) plant, with China mooted as an alternative.
The company announced on Tuesday that it intends to proceed with work on a world-scale MDI plant, after suspending plans to build a unit in the US in early 2020.
The producer had announced in January 2020 that it would halt work on its planned 500,000 tonne/year MDI plant at its Baytown, Texas, production complex, in the face of challenging global market conditions.
A substantial increase in construction costs in the US, both in terms of labour and materials, since the project was first announced in 2018 could result in a lower return on capital employed (ROCE) than originally anticipated, prompting the re-examination of the location for the investment.
“Construction costs in the US have significantly increased, leading to a lower return on capital employed versus our original plan,” said Covestro CEO Markus Steilemann, speaking on an investor call.
“In China, construction costs have remained relatively flat, with attractive ROCE. Strong demand growth in China and Asia creates the need for another plant in Asia,” he added.
The company targets a return of at least seven percentage points above its cost of capital, according to CFO Thomas Toepfer, meaning a target ROCE of around 15%.
“That is certainly a challenge for a greenfield investment. But we think that we will be at least close to that, and therefore, this is also why we’re critically looking into all the options with respect to locations,” he said.
The company’s existing MDI assets are fully utilised at present, according to Steilemann, with a project to increase capacity at its Tarragona, Spain, plant, still underway but expected by 2025 instead of the initial estimate of 2022 when the project was first announced at the end of 2017.
“We are only able to grow below demand growth until the start-up of a new plant,” he said.
Covestro had originally guided for capital expenditure of $1.5bn for its new world-scale plant, but that figure may be set to rise irrespective of its final location in China or the US.
“I would say it’s not a secret that there has been significant cost inflation since [the project was announced], especially for materials like steel but also for labour, especially in the US, so this is one of the reasons why we are looking into all the options we have,” Steilemann said.
“Relative to the $1.5bn, there would be a slight increase to that in China, but there would certainly be a significant increase in the US,” he added.
A decision will be announced at the next stage of project development, he added, with the plant expected to be commissioned in 2026, two years after the original forecast start date for the Baytown project. The plant capacity is also likely to be around the originally forecast 500,000 tonnes/year, but the final figure is still to be determined.
OTHER INVESTMENTS
The firm is also planning to expand its toluene diisocyanate (TDI) production by de-bottlenecking facilities in Dormagen, Germany, expected to be complete by 2023. The unit currently has a production capacity of 250,000 tonnes/year, according to ICIS data.
Also earmarked for investment are coatings and adhesives, and specialty films, with planned expenditure of €300m and €200m apiece by 2025, while the firm is planning more investment in the circular economy.
“In order to achieve our ambitious objectives and become fully circular, we are planning targeted capex spending of around €1bn on circular economy projects over the next ten years,” Toepfer said.
Covestro is planning to increase capital spending over the next few years, with an estimated €800m of investment this year expected to expand substantially in the near future, he added.
On the back of new investments, the realignment of the business into solutions and specialties and performance materials in mid-2021, and the acquisition of DSM’s resins and functional materials business, Covestro expects to increase mid-cycle earnings before interest, taxes, depreciation and amortisation (EBITDA) from €2.2bn to €2.8bn by 2024, the company added.
(update re-leads, adds CEO, CFO comment)
September 28, 2021
Huntsman and KPX for JV
KPX Chemical and Huntsman form Joint Venture in Korea
Download as PDF September 28, 2021 2:00am EDT
Strategic alliance will provide Korean automakers with advanced polyurethane systems solutions
THE WOODLANDS, Texas, Sept. 28, 2021 /PRNewswire/ — KPX Chemical, a leading polyols producer for polyurethanes in Korea, and Huntsman Corporation (NYSE: HUN), a world-leading MDI-based polyurethanes and specialty chemical manufacturer, today announced the establishment of a joint venture named KPX HUNTSMAN POLYURETHANES AUTOMOTIVE CO., LTD. (KHPUA). The joint venture will create and provide innovative polyurethane system solutions to Korean automakers from a specialty polyurethanes manufacturing facility at KPX Chemical’s Ulsan plant. Operations are expected to commence by the end of October.
The Korean automotive industry is undergoing profound changes and presents new opportunities for high performance and light weight polyurethane system solutions. The new joint venture will accelerate growth in this sector by providing sustainable innovations and a high level of technical service support to its customers. KPX Chemical will leverage its 47-years’ experience in polyol technology and know-how by combining it with Huntsman’s proven ability to develop high performance, differentiated, MDI-based automotive solutions for vehicle manufacturers and its fully integrated global supply chain.
Tony Hankins, President of Huntsman’s Polyurethanes division and CEO of Huntsman Asia Pacific, said: “We are delighted to join forces with KPX Chemical. Korea is one of Huntsman’s key markets in Asia and driving continued business growth in the automotive industry is a priority for us. The new joint venture will create and provide customized polyurethane systems solutions to meet local automotive customers’ needs for improved comfort, superior acoustics and light-weighting. By creating value for its customers, KHPUA will enable downstream polyurethanes businesses to develop in a more sustainable way, both economically and environmentally.”
Kim Moon-young, President of KPX Chemical, said: “This cooperation is of great strategic significance to both parties. Together, under the banner of KHPUA, we will leverage the R&D and capacity advantages of KPX Chemical and Huntsman in the region to become the industry’s preferred innovation partner. It is an exciting time to be creating a new venture and we look forward to working with key players in the region to meet growing demand for autonomous vehicles and electric transport solutions that can support the country’s carbon neutrality ambitions.”
September 28, 2021
Huntsman and KPX for JV
KPX Chemical and Huntsman form Joint Venture in Korea
Download as PDF September 28, 2021 2:00am EDT
Strategic alliance will provide Korean automakers with advanced polyurethane systems solutions
THE WOODLANDS, Texas, Sept. 28, 2021 /PRNewswire/ — KPX Chemical, a leading polyols producer for polyurethanes in Korea, and Huntsman Corporation (NYSE: HUN), a world-leading MDI-based polyurethanes and specialty chemical manufacturer, today announced the establishment of a joint venture named KPX HUNTSMAN POLYURETHANES AUTOMOTIVE CO., LTD. (KHPUA). The joint venture will create and provide innovative polyurethane system solutions to Korean automakers from a specialty polyurethanes manufacturing facility at KPX Chemical’s Ulsan plant. Operations are expected to commence by the end of October.
The Korean automotive industry is undergoing profound changes and presents new opportunities for high performance and light weight polyurethane system solutions. The new joint venture will accelerate growth in this sector by providing sustainable innovations and a high level of technical service support to its customers. KPX Chemical will leverage its 47-years’ experience in polyol technology and know-how by combining it with Huntsman’s proven ability to develop high performance, differentiated, MDI-based automotive solutions for vehicle manufacturers and its fully integrated global supply chain.
Tony Hankins, President of Huntsman’s Polyurethanes division and CEO of Huntsman Asia Pacific, said: “We are delighted to join forces with KPX Chemical. Korea is one of Huntsman’s key markets in Asia and driving continued business growth in the automotive industry is a priority for us. The new joint venture will create and provide customized polyurethane systems solutions to meet local automotive customers’ needs for improved comfort, superior acoustics and light-weighting. By creating value for its customers, KHPUA will enable downstream polyurethanes businesses to develop in a more sustainable way, both economically and environmentally.”
Kim Moon-young, President of KPX Chemical, said: “This cooperation is of great strategic significance to both parties. Together, under the banner of KHPUA, we will leverage the R&D and capacity advantages of KPX Chemical and Huntsman in the region to become the industry’s preferred innovation partner. It is an exciting time to be creating a new venture and we look forward to working with key players in the region to meet growing demand for autonomous vehicles and electric transport solutions that can support the country’s carbon neutrality ambitions.”
September 27, 2021
Activist Buys Huntsman Shares
Starboard Value fund takes 8%-plus stake in Huntsman – WSJ
Sep. 27, 2021 5:27 PM ETHuntsman Corporation (HUN)By: Carl Surran, SA News Editor1 Comment
- Huntsman (NYSE:HUN) +3.8% post-market after the Wall Street Journal reports activist hedge fund Starboard Value has taken a stake of more than 8% in the company, which would be valued at $500M or more.
- Starboard also plans to seek changes to improve the company’s stock performance, according to the report, although the exact nature of the intended changes is not certain.
- Huntsman shares are little changed since the company’s IPO in 2005, closing today at $28.07 vs. $24.50 on its first day of trading, according to WSJ.
September 27, 2021
Activist Buys Huntsman Shares
Starboard Value fund takes 8%-plus stake in Huntsman – WSJ
Sep. 27, 2021 5:27 PM ETHuntsman Corporation (HUN)By: Carl Surran, SA News Editor1 Comment
- Huntsman (NYSE:HUN) +3.8% post-market after the Wall Street Journal reports activist hedge fund Starboard Value has taken a stake of more than 8% in the company, which would be valued at $500M or more.
- Starboard also plans to seek changes to improve the company’s stock performance, according to the report, although the exact nature of the intended changes is not certain.
- Huntsman shares are little changed since the company’s IPO in 2005, closing today at $28.07 vs. $24.50 on its first day of trading, according to WSJ.
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