Bayer, the German-based chemical and health care giant, launched the construction of two new projects on Monday, with a total investment of approximately US$200 million, in Shanghai, marking its determination to increase its long-term competitiveness in China's growing market.

It is only part of Bayer Material Science AG's US$3.1 billion investment in its Integrated Production Site (IPS) in the Shanghai Chemical Industry Park (SCIP) in Caojing.

"The start-up of these two projects is fundamental for our business in China and the Asia-Pacific region," said Dr Hagen Noerenberg, chairman of Bayer Material Science.

By 2006, a production facility for the coating raw material hexamethylene diisocyanate (HDI) and a production plant and logistics facilities for the polyurethane raw material diphenylmethane diisocyanate (MDI) will be built in IPS.

"The demand for HDI in China and the Asia-Pacific region is growing at about 10 percent every year. After this project begins operation in 2006, our local customers will be able to get the products directly from our Caojing site, instead of importing from Leverkusen, Bayer's headquarters in Germany," said Dr Noerenberg, "It accords with the principle to localize our production."

The HDI project involves a total capacity of up to 50,000 tons per year and an investment of around US$100 million. This will make it the biggest Bayer production site for coating materials in the Asia-Pacific region.

HDI is a precursor product for aliphatic polyisocyanates, which are used as raw materials in high-quality polyurethane-based coatings and are applied predominantly in automotive, industrial and plastics coatings.

By 2006, a production capacity of 30,000 tons per year HDI will initially be built, and, depending on how the market develops in the region, the capacity can then be extended by another 20,000 tons a year in a second construction phase.

The agreement on the building of the HDI plant was signed in May in Berlin in the presence of Chinese Premier, Wen Jiabao, and German Federal Chancellor, Gerhard Schroeder.

A production plant for polymeric and monomeric MDI from crude MDI a so-called "splitter" and its logistics facilities are due to be completed by mid-2006. The splitter will initially go on stream with a capacity of 80,000 tons a year.

The second phase, which is scheduled to begin operation in 2008, involving the building of a production plant for crude MDI with an annual capacity of 230,000 metric tons will follow.

(China Daily October 12, 2004)