Back-to-back major joker moves! covestro’s 1.32 million ton mdi dual-line expansion and hdi acquisition reshape global polyurethane landscape

From June 30 to July 2, 2026, in just three days, German chemical giant Covestro unveiled two major strategic moves in succession: first announcing a “dual-track” expansion in Shanghai and the UAE with a combined 1.32 million tons of new MDI capacity, and then announcing the completion of its acquisition of two HDI derivatives production sites in Thailand and the United States from the former Vencorex. This series of intensive moves is profoundly reshaping the competitive landscape of the global polyurethane raw materials industry.

Image source: Covestro

1. Expansion of 1.32 Million Tons of MDI Capacity: A Leap from 1.77 Million Tons to 3.09 Million Tons

On June 30, 2026, Covestro officially announced an MDI strategic investment plan. The plan consists of two core components:

Line 1: A new 660,000 tpy facility in Shanghai.Covestro plans to build a new MDI production unit with an annual capacity of 660,000 tonnes at its Shanghai Integrated Site, with commissioning targeted for around 2030. The unit will adopt Covestro’s proprietary MDI AdiP (adiabatic isothermal phosgenation) technology, which significantly reduces energy consumption and is designed to achieve net-zero greenhouse gas emissions (Scope 1 and 2). In addition to the main MDI unit, the investment also includes upstream facilities and supporting infrastructure, creating an integrated production layout by producing key intermediates on-site.

The Caojing Integration Base in Shanghai is Covestro's largest comprehensive production base globally. Since the groundbreaking in 2001, nearly 4 billion euros have been invested here. By 2025, after the completion of technological upgrades, the MDI production capacity will increase from 500,000 tons to 650,000 tons. The newly constructed 660,000-ton facility is an "incremental expansion" based on the existing foundation.

Second line: Feasibility study of the same scale in the UAE.Covestro also announced that it has launched a feasibility study for an MDI facility of equivalent scale in the UAE. This plan will rely on its previous partnership with TA'ZIZ and Fertiglobe, focusing on assessing the synergies within the emerging ecosystem of the Ruwais Industrial City. In February 2026, Covestro signed a tripartite memorandum of understanding with Fertiglobe (the world's largest exporter of urea and ammonia by sea) and TA'ZIZ to jointly explore cooperation opportunities in the ammonia value chain.

It is noteworthy that this feasibility study in the UAE is the first large-scale capacity layout initiated by Covestro in the Middle East since its acquisition by XRG, a subsidiary of the Abu Dhabi National Oil Company (ADNOC). XRG views Covestro as a cornerstone for developing its high-performance materials and specialty chemicals business, aiming to build one of the world's top five chemical companies.

The path for capacity leap is clear.Covestro currently ranks third globally in MDI capacity, with 1.77 million tonnes per year. After the Shanghai 660,000-tonne project comes online, combined with the same-scale capacity in the UAE, Covestro’s total capacity will rise to about 3.09 million tonnes per year, surpassing BASF (about 2.07 million tonnes per year) to move up to second place globally. Meanwhile, Wanhua Chemical is also continuing to expand production — the Fujian technical upgrade was completed in the second quarter of 2026, bringing its total MDI capacity to 4.5 million tonnes per year and firmly maintaining its position as the global leader. Looking ahead to 2030, the competitive landscape is already clear: Wanhua Chemical remains far ahead, while Covestro and BASF are set to battle for second place.

II. Industry Shift: Capacity Is Moving from Europe to Asia-Pacific and the Middle East

Against the backdrop of a major global shift in the chemical industry, Covestro’s latest “dual-track capacity expansion” is particularly eye-catching.

European chemical companies are "cutting off an arm to save their lives."Since 2026, global chemical companies have announced layoff plans affecting more than 12,500 employees: Dow Chemical is cutting 4,500 jobs and permanently shutting down its cracking and chlor-alkali facilities in Germany; BASF has reduced its workforce by a total of 4,800 employees and sold its coatings business for €7.7 billion; Evonik is cutting another 3,200 jobs. From 2022 to 2025, the EU shut down a cumulative total of about 37 million tonnes of chemical production capacity, accounting for around 9% of its total capacity. After the outbreak of the Russia-Ukraine conflict, natural gas prices in Europe remained more than three times higher than in North America for an extended period, while Germany’s chemical capacity utilization rate fell to just 70%, a historic low.

China has become the core global hub for MDI production capacity.Currently, China's MDI total capacity accounts for over 60% of the global share. By the end of 2025, the MDI capacity in Asia is expected to reach approximately 6.48 million tons, accounting for 58% of the total capacity; Europe will account for 24%, the Americas for 14%, and the Middle East for only 4%. It is estimated that by around 2030, an additional 2.7 million tons of MDI capacity will be added globally, with China contributing 1.762 million tons, accounting for 65% of the global capacity. Asia's capacity will increase to 8.337 million tons, raising its share to 60%, while the Middle East's capacity share will significantly rise to around 8%.

Low-carbon competition has become a new arena.Covestro’s two newly built plants are both designed to achieve net-zero emissions (Scopes 1 and 2). In the future, beyond competition in scale and cost, low-carbon capacity and green product certification will become core competitive advantages in the MDI industry.

The top seven MDI production capacity companies in the world (as of the end of 2025):

III. HDI Acquisition Finalized: Strengthening the Specialty Isocyanates Portfolio

Just two days after the announcement of MDI expansion plans, on July 1, 2026, Covestro officially completed the acquisition of two HDI derivatives production facilities located in Rayong, Thailand, and Freeport, Texas, previously owned by Vencorex.

HDI (hexamethylene diisocyanate) derivatives are core raw materials for high-performance polyurethane coatings, adhesives, and sealants, and are widely used in automotive coatings, infrastructure protective coatings, marine coatings, wood furniture, electronic products, and other demanding industrial fields.

Vencorex was once a global leader in aliphatic isocyanates, but fell into difficulty amid Europe’s energy crisis following the Russia-Ukraine war. In September 2024, PTT Global Chemical announced that its subsidiaries Vencorex France and Vencorex TDI had entered judicial restructuring proceedings. The company was subsequently “carved up”: on April 10, 2025, the Lyon Commercial Court in France ruled that Wanhua Chemical, through its Hungarian subsidiary BorsodChem, would acquire Vencorex’s specialty isocyanates business in France, including its production site near Grenoble and 70,000 tonnes of HDI monomer capacity. Meanwhile, Vencorex’s HDI derivatives production sites in Thailand and the United States were acquired by Covestro.

Thomas Roemer, head of Covestro’s Coatings and Adhesives business unit, said: “By adding production sites in Thailand and the United States, we are able to strengthen our regional production capabilities and improve our ability to supply customers locally.” The two new sites will effectively complement Covestro’s existing HDI derivatives production network in Europe, Asia and North America. Covestro Chief Commercial Officer Monique Buch noted: “Strong customer relationships are built on trust, reliability and the ability to continuously create value. This acquisition strengthens our position in this business area.”

This acquisition is also an important move by Covestro in the coatings and adhesives industry following its previous acquisition of DSM's resins and functional materials business.

IV. Looking Ahead to 2030: The Oligopolistic Landscape Will Remain Unchanged, but the Ranking Will Be Reshuffled

Industry analysts point out that over the next five years, the global MDI industry will enter a period of concentrated capacity expansion. The deep-rooted structure in which the five major giants—Wanhua Chemical, Covestro, BASF, Huntsman, and Dow—firmly control more than 90% of total capacity will not undergo any fundamental change. However, the ranking among the leading companies will see a historic shift.

• Wanhua ChemicalRanks first globally, with an annual production capacity of 4.5 million tons.

• CovestroSurpassing BASF to become the world’s second-largest, with production capacity increasing to approximately 3.09 million tons per year;

• BASFslipped to third place.

This capacity race initiated by Covestro is not only a crucial step in elevating its own industry standing, but also reflects the deeper trend of a new round of expansion in the global MDI industry and a shift in the center of gravity of the sector. From Europe to the Asia-Pacific and the Middle East, and from traditional high-energy-consumption models to green, net-zero-emission production, the geopolitical landscape and technological standards of the global polyurethane feedstock industry are being redefined.