Covestro AG is delaying further work on the expansion of its MDI plant in Texas. The MDI-500 project will be paused for 18-24 months.
The company cited "challenging global market conditions" for the hiatus in a Jan. 21 news release about the decision. However, it stressed that the company has no plans to exit the MDI market, and that the project has not been canceled.
"The decision is fully in line with Covestro's standard investment procedures, through which investment plans are regularly reviewed against the backdrop of changing economic and market conditions," Covestro officials said in the release. "While this project is temporarily on hold, the company remains firmly committed to the long-term growth potential of the MDI market and will continue to provide reliable MDI supply for its customers."
The decision to build the plant was first announced in late 2018, at an estimated cost of 1.5 billion euros ($1.6 billion). It was slated to be fully operational by 2024. Covestro added that it remains committed to Baytown as the "ideal location" for the expansion of its North American MDI capacity.
In its third quarter for the 2019 fiscal year, Leverkusen, Germany-based Covestro posted weak results in the third quarter of the year, due in part to growing competition, a pricing shift, and high prior-year comparison levels.
Over the first nine months of the year, Covestro's sales fell 15.8 percent to 9.5 billion euros ($10.5 billion), mainly as a result of lower selling prices, the company announced Oct. 28.
Earnings before interest, taxes, deductions and amortization (EBITDA) declined by 54.4 percent to 1.32 billion euros ($1.46 billion), while profit plunged 70.5 percent to 515 million euros ($571.5 million).