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Bayer CEO Wenning at the inauguration of new production facilities in Shanghai

Bayer MaterialScience AG : 28 August, 2007  (Company News)
Total capital expenditures of US$ 1.8 billion at the Shanghai Chemical Industry Park through 2009 / Significant capacity expansions for polycarbonates, polyurethanes and coating raw materials / Bayer
Bayer inaugurated the new production facilities of the Bayer MaterialScience subgroup in Shanghai. “China is of central importance to Bayer in the Asia-Pacific region, both as a production base and for our business strategy,” said Management Board Chairman Werner Wenning, underlining the country’s significance for Bayer. The project at the Shanghai Chemical Industry Park represents a total capital expenditure volume of about US$ 1.8 billion through 2009, explained Wenning in the presence of numerous guests from politics, industry and the media: “This is our biggest-ever project outside of Germany.”

At the inauguration ceremony attended by leading representatives of the City of Shanghai, the entire Management Board of Bayer AG and journalists from Asia and Europe, Wenning said: “The integrated Bayer site in Shanghai is developing into our biggest and most technically advanced production site in the entire Asia-Pacific region. In turn, this region, and particularly China, is one of the most important future markets for the Bayer Group, a market that is set to become even more significant and dynamic.” Wenning said the newly inaugurated facilities of Bayer MaterialScience will add substantially to production capacities.

Bayer MaterialScience CEO Dr. Hagen Noerenberg described the remarkable perspectives offered by the integrated site: “In the future this site will supply customers throughout the region with approximately 900,000 tons of plastics products a year. Our long-term commitment to the Chinese market and our customers here is a strategic cornerstone of our activities. We aim to play a leading role in advancing the Chinese plastics industry through our products, technologies and employee training.”

In these respects the company expects the new production facilities to play a key role. Dr. Jürgen Dahmer, Senior Bayer Representative for Greater China and Senior Representative for Bayer MaterialScience in China, and thus “landlord” of the Shanghai site, presented the details of these plans in his welcoming address. The existing facilities will now be supplemented by
- a world-scale polycarbonate production unit with a starting capacity of 100,000 tons per year,
- the first polyurethane facility at the Bayer site, a crude MDI (diphenylmethane diisocyanate) splitter with a capacity of 80,000 tons per year and
- a production unit for HDI (hexamethylene diisocyanate) with an initial capacity of 30,000 tons per year.

The polycarbonate facility for the manufacture of Bayer’s high-tech material Makrolon represents a capital investment of US$ 450 million. There are already plans to expand the capacity of this facility, which will primarily supply customers in the region, to 200,000 tons per year by 2008. Makrolon is used in the manufacture of CDs, DVDs, automotive glazing and many other applications. It is also used in the construction industry: for example, the futuristic roof of the Tianjin Olympic Center Stadium will be made of Makrolon polycarbonate. The company is confident that the material will be used at other sports arenas as well.

The Asia-Pacific region is the biggest market for polycarbonate in terms of volume, with 1.5 million tons sold last year, more than half the world market of 2.7 million tons. Of this volume, Greater China alone accounts for 650,000 tons, with consumption growing at around 18 percent a year.

Polyurethane raw materials are a further focus of production at the site. These MDI-based intermediates are used in the production of rigid foam for thermal insulation, among other applications. The inaugurated facility, a “splitter” that separates crude MDI into monomeric and polymeric MDI, is just the beginning. A large-scale MDI production facility with a capacity of 350,000 tons per year, due on stream in 2008, will be the largest of its kind in the world. Also planned is a production facility for the intermediate TDI (toluene diisocyanate), which is used to manufacture flexible foams for applications such as car seats, mattresses and furniture. With a capacity of 160,000 tons per year, this plant is expected to come on stream in 2009.

Bayer began its production activities at the site in 2003 with coating raw materials, for which capacity currently is 22,500 tons per year. The company will now be able to produce another 30,000 tons of the raw material HDI, with the option of expanding this capacity by a further 20,000 tons. Polyurethane-based coatings today offer the best performance spectrum. They are used, for example, on the Lupu Bridge, Shanghai’s most famous landmark, or in high-tech automotive coatings to provide long-term protection against weathering.
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