Covestro, based in Leverkusen, Germany, on June 30 announced plans to invest in a new world-scale methylene diphenyl diisocyanate (MDI) production train at its integrated manufacturing site in Shanghai, China, and is conducting a feasibility study for a second facility of similar scale in the United Arab Emirates.

According to the company, the Shanghai project will add 660,000 metric tons of annual MDI production capacity, with startup targeted by the end of the decade. The investment includes upstream production units and supporting infrastructure to manufacture key intermediates on-site, creating an integrated production complex.

Covestro said the new facility will use its proprietary AdiP technology, which is designed to reduce energy consumption, and is expected to operate with net-zero Scope 1 and Scope 2 greenhouse gas emissions.

The company said long-term global demand for MDI is expected to increase across applications including building insulation, appliances and sports and lifestyle products, particularly in Asia and the Middle East. According to Covestro, demand growth is projected to outpace planned industry capacity additions, increasing the need for reliable large-scale supply.

The UAE feasibility study will evaluate construction of a similarly sized MDI production train at Al Ruwais Industrial City, building on Covestro’s previously announced partnership with TA'ZIZ and Fertiglobe. According to the company, the assessment will examine opportunities to integrate with the TA'ZIZ chemicals hub, including access to renewable energy and locally available raw materials such as chlorine and ammonia.

Covestro said both projects are supported by strategic investor XRG and are intended to strengthen supply resilience through integrated value chains and expanded global manufacturing capabilities.

The announcement follows several recent sustainability-focused initiatives by Covestro. In June, the company launched the EU-funded Bio4PURConti project to develop the first continuous process for producing bio-based aniline, a key raw material used to manufacture MDI. Earlier in the year, Covestro also announced plans to install a new steam compressor at its Dormagen, Germany, site that is expected to reduce annual energy consumption by 2% and cut more than 40,000 metric tons of CO₂ emissions by recovering waste steam from production.