Huntsman, BASF To Set Up Manufacturing Base In Shanghai

By BridgeNews Salt Lake City-based chemical giant Huntsman Polyurethanes (a division of $7 billion Huntsman Corp.) has joined hands with Germany's BASF and a group of Chinese chemical firms to establish a 160,000-ton-a-year MDI (diphenyl methane diisocyanate) manufacturing base in Shanghai, says vice chairman of the company, Jon Huntsman Jr. The MDI facilities, which are expected to take three years to build, could involve a total investment of several hundred million U.S. dollars, Huntsman says. MDI is a major raw material needed for making polyurethanes (PU), the most important product in the application chemical industry. Huntsman and BASF, together with their Chinese partners have begun a feasibility study that could see the plant in operation by the end of 2004, following approval from China's State Development Planning Commission in July. The Chinese partners involved in the project include Shanghai Tianyuan (Group) Corp., Shanghai Huayi (Group) Co., Shanghai Chemical Industry Park Development Co. Ltd., China Petroleum and Chemical Co. Ltd., and Sinopec Gaoqiao Petrochemical Corp. Huntsman and BASF will come up with 70% of the total investment needed for the project, with each contributing 35%, while their Chinese partners are expected to provide the remaining 30%, according to Tony Hankins, vice president of Huntsman, Asia Pacific. "China is at the heart of our [development] strategy in Asia Pacific," says Huntsman, noting that in 1999 China used around 120,000 tons of MDI, an annual increase of 20%. "China's PU market has expanded at an impressive pace, and the country is gradually becoming a key industry player." The new MDI plant also will mean financial savings for China as the country spent some US$250 million on MDI imports in 1999.

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