Wanhua Chemical to build isocyanates plant in Louisiana

China’s Wanhua Chemical plans to build a $1.1 billion methylene diphenyl diisocyanate (MDI) plant in Louisiana.

Wanhua is the world’s largest producer of the polyurethane raw material, which is also made by U.S. and European firms such as BASF, Covestro, Dow Chemical, and Huntsman Corp. According to the consulting firm IHS Markit, Wanhau’s 1.8 million metric tons of annual MDI capacity represents about 24% of the world’s total.

MDI is reacted with polyols to make the polyurethanes used in rigid insulation, adhesives, and other applications.

The Chinese company hasn’t released details about the project, including the size of the plant or the start-up date. It expects to wrap up site selection later this year. It will foot about $950 million of the bill itself. An unnamed partner will invest about $170 million.

Wanhua operates two MDI plants in its home country. In 2011, it branched out overseas with the $1.7 billion purchase of the Hungarian polyurethanes maker BorsodChem. Its sales in 2015 were about $3 billion.

Last year, Wanhua CEO Zengtai Liao told C&EN that the firm was considering building a plant on the U.S. Gulf Coast.

A company that prides itself on safe and efficient operations, Wanhua suffered an explosion at its Yantai, China, plant last year that killed four. The plant was undergoing maintenance at the time.

Louisiana state officials have been discussing the project with Wanhua since 2013. The company chose Louisiana over potential locations in Texas in part because of incentives including a $4.3 million grant to help offset site infrastructure costs.

At the IHS Markit World Petrochemical Conference in Houston last month, IHS Markit senior analyst James Elliott noted that more MDI capacity would be needed over the next five years to keep up with demand, which is growing at around 4% per year globally.

The situation is particularly acute in North America. “From 2011 to 2016, we have seen a fallow period of MDI additions,” Elliot said. On the horizon for the region are incremental expansions of existing BASF and Huntsman facilities. In addition, Huntsman has been studying building a 400,000-metric-ton plant at its Geismar, La., complex since 2014.