BASF Signs Another Giant: Covestro Already Set Up, Just Missing Wanhua Chemical?

_{November 14thBASF Shanghai Chemical Industry Park Industrial Gases Co., Ltd. (SCIPIG), a subsidiary of Air Liquide. Shanghai Shenji Energy and Environmental Technology Co., Ltd. (Shanghai Shenji)Signed a multi-year contract. The cooperation aims to utilize biogas.Low Carbon Footprint Diphenylmethane Diisocyanate (MDI)Production.}

_{According to the contract, Shanghai Shenji will produce biomethane by processing and resource utilization of waste, which will be directly supplied to SCIPIG for the production of bio-based hydrogen and carbon monoxide. BASF will then use these bio-based industrial gases to produce MDI and its derivative products with reduced product carbon footprint (rPCF) characteristics. This tripartite cooperation will be the first time Shanghai utilizes biogas to locally produce bio-hydrogen and carbon monoxide, while fully complying with the stringent ISCC Plus (International Sustainability and Carbon Certification) standards.}

_{On November 19 last year, Shanghai Gas and Shenji Environment, subsidiaries of Sheneng Group, signed a memorandum of understanding with BASF for cooperation in bio-based raw materials. The aim is to collaborate in the market application and international certification of biogas, promoting the development of sustainable solutions. The progress made in Shanghai is a practical implementation of this memorandum.}

_{In the field of bio-based MDI, BASF is at the forefront globally. In October 2023, BASF successfully produced the world's first biomass balance (BMB) MDI. On January 19, 2024, BASF reached a strategic cooperation agreement with Asahi Kasei for biomass balance (BMB) methylene diphenyl diisocyanate (MDI) synthetic leather. In November 2024, BASF, in collaboration with Mastercard, launched biomass balance MDI polyurethane cold storage sandwich panels.}

_{Then there's Covestro, which is also not to be outdone. In June 2022,CovestroIn November 2023, Covestro will produce MDI at its integrated site in Shanghai using benzene sourced from SK geo centric, which is produced from renewable raw materials certified by ISCC and provided by Neste.CovestroSigned its first commercial order for low-carbon footprint MDI, based on the quality balance method and containing a share of biomass raw materials, certified by ISCC PLUS in the Asia-Pacific region; 2024.December,CovestroAnnounce partnership with global building materials distributor Poland.Selena GroupJoin hands again. Bio-based MDI (Diphenylmethane diisocyanate) (Desmodur®CQ MB)Jointly launched an innovative product - Tytan Professional® Brick Adhesive.}

_{At this point, the world's three MDI giants are missing only the leader Wanhua Chemical, which has not made any significant market moves. It's unclear whether they are quietly focused on research and development or believe that specialty isocyanates are more appealing. Recently, the Ministry of Industry and Information Technology particularly mentioned CHDI and NDI, with New Chemical Materials and Meirui New Materials actively making their layouts.}

_{MDI，As one of the bulk products with the highest comprehensive barriers in the chemical industry, MDI has high technical barriers and a limited number of global production enterprises. The main producing companies include:Wanhua Chemical(Yantai 1.1 million tons/year; Ningbo 1.5 million tons/year; Fujian 800,000 tons/year; Hungary 400,000 tons/year, a total of 3.8 million tons, with Fujian having a subsequent expansion of 700,000 tons/year.)BASF(Chongqing 400,000 tons + 130,000 tons expansion, Shanghai 190,000 tons, Yeosu, South Korea 250,000 tons, Antwerp, Belgium 650,000 tons, Gaisma, USA 400,000 tons, totaling 2,020,000 tons/year)Covestro(Shanghai 600,000 tons/year, a total of 1.8 million tons/year)Huntsman(Netherlands 470,000 tons/year, United States 500,000 tons/year, Shanghai 480,000 tons/year, total 1,350,000 tons/year)Dow Chemical(United States 340,000 tons/year, Germany 200,000 tons/year, Portugal 190,000 tons/year, Saudi Arabia 400,000 tons/year, totaling 1,130,000 tons/year),Mitsui Chemicals, JapanKorea Kumho Mitsui Chemicals' 200,000 tons/year expansion plan has been completed, with a production capacity of 610,000 tons/year.Tosoh Corporation(China's 400,000 tons/year - of which 100,000 tons of capacity is transferred to Vietnam, and 80,000 tons/year in Ruian, Zhejiang, totaling 480,000 tons/year). With the release of domestic capacity, China has become a net exporter of MDI.}

_{It is worth mentioning that the price of MDI continues to fluctuate due to frequent maintenance and force majeure events.November 15, 2025Wanhua Chemical (Ningbo) Co., Ltd.'s MDI Phase II facility (1 million tons/year) will begin a 55-day shutdown for maintenance. Covestro and BASF also plan to carry out concentrated maintenance on their facilities in November and December. On March 5, 2025, the U.S. Department of Commerce initiated an anti-dumping investigation into imports of methylene diphenyl diisocyanate (MDI) originating from China, and ultimately decided to postpone the final determination on September 16, extending temporary measures.}

_{The industry's competitive landscape is being reshaped due to the domestic capacity boom and Europe's energy transition: In 2024, Huntsman's MDI facility in Caojing, Shanghai will operate independently; at the beginning of 2025, Huntsman will close its European polyurethane facilities; in April 2025, Lanxess sold its polyurethane business. Meanwhile, Wanhua Chemical achieved year-on-year growth in both revenue and net profit in the third quarter, indicating that the MDI industry is gradually becoming highly concentrated, with the core position of the Chinese market becoming increasingly prominent.}