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Dedication of New TDI Facility Marks Completion of Five-Year Investment Program at Baytown Complex

Bayer MaterialScience AG : 21 February, 2001  (Company News)
Bayer Corporation dedicated its new $150 million facility for the manufacture of toluene diisocyanate (TDI) today at the company's Baytown, Texas, polymers and chemicals manufacturing complex.
Operated by Bayer's Polyurethanes Division, TDI-II came on-stream at Baytown in May 2000 and has been operating near capacity since July 2000. The facility's 220 million pounds of annual TDI production capacity is dedicated for export to customers in the fast- growing markets of Asia and South America. In fact, the unit was sold out by the end of 2000.

With this new facility, Bayer's annual TDI production capacity in the United States is over 500 million pounds. TDI is used in the production of flexible polyurethane foam cushions for furniture, bedding and automotive seating.

The TDI-II facility is the most recent of several capital investments in polyurethane manufacturing that Bayer has made in its U.S. operations, and specifically at the Baytown site, since 1995. Since then, Bayer has invested:

$140 million to construct a diphenylmethane diisocyanate (MDI) manufacturing facility, which was completed in 1998;

$140 million for a di- nitrotoluene (DNT) and toluene diamine (TDA) expansion, which provide raw materials for the production of TDI, and was completed in 2000; and,

$500 million for infrastructure and other raw materials facilities for the manufacture of isocyanates, including a chlor-alkali facility, all completed by 2000.

The polyurethane investments are part of a broader polymers capital expenditure program, which totaled $1.3 billion in new investments at Baytown from 1995 through 2000. The TDI facility dedicated today was the last major project in the five-year investment program. This program was one of the largest capital investment programs ever undertaken by the worldwide Bayer Group in the United States or worldwide.

'TDI-II underscores Bayer's commitment to the global polyurethane market,' said Lawrence D. Stern, Executive Vice President of Bayer Corporation and President, Polyurethanes for NAFTA. 'It features state-of-the-art engineering and backward integration into feedstock raw materials for TDI production. TDI-II also demonstrates Bayer's commitment to provide customers around the world with high-quality polyurethane raw materials and a reliable supply of products.'

Anticipated Market Demand

Bayer forecasts global consumption of TDI will grow approximately 4.5 percent annually over the next few years. While the TDI facility dedicated today has already answered the demand for TDI in the Asian market, Bayer anticipates the need for more TDI capacity on a global basis.

'We do expect TDI global supply to become tight enough to warrant construction of another worldscale TDI plant,' said Stern. 'We will continue to monitor the supply and demand situation, as well as to evaluate our reinvestment economics,' he explained.
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