Westward Ho!

BASF is considering the southwest China city of Chongqing to set up a second polyurethane production base in that country.

The project is still at an early stage. So far, BASF has signed a memorandum of understanding with local authorities and with Chongqing Chemical & Pharmaceutical Holding, a consortium of state-owned chemical companies.

BASF would build a 400,000-metric-ton-per-year plant producing the polyurethane intermediate methylene diphenyl diisocyanate (MDI). The plant would come on-line after 2010 and would likely cost more than $500 million. The company has been operating polyurethane plants worth about $1 billion in Shanghai's Caojing district since last year.

But only a few multinational chemical companies have invested in China's interior. BP has been operating a large acetic acid plant in Chongqing since 1999.

BASF's spokesman in Hong Kong, Wylie Rogers, says the Chongqing plant would serve a market of 300 million people. In making a final decision, he says, BASF will weigh factors such as raw material availability, infrastructure quality, and the regional shipping network. Expanding the Caojing facility is an option, he adds.

David Jiang, president of Sinodata Consulting, a Beijing-based consulting firm that advises multinational chemical companies, observes that BASF's Caojing complex took much longer to build than a similar one run by the Chinese company Yantai in the city of Ningbo. He's not sure whether BASF had problems with its partners or if Caojing is a difficult site.

The city of Chongqing recently invested about $1.9 billion to set up the Chongqing Chemical Industry Park. Officials there told C&EN in October that both BASF and Bayer were considering polyurethane facilities in the park (C&EN, Oct. 30, 2006, page 23).