On July 31, BASF and Huntsman, together with their Chinese partner companies - Shanghai Hua Yi (Group Company), Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. and Shanghai Chlor-Alkali Chemical Co., Ltd., announce the planned separation of their joint MDI (diphenylmethane diisocyanate) production at Shanghai Lianheng Isocyanate Co., Ltd. (SLIC).

Going forward, the companies will operate the two MDI plants located at the site in Caojing, China independently, according to the news release.

Huntsman, together with Shanghai Chlor-Alkali Chemical Co., Ltd, will own and operate the original MDI plant that started commercial production in 2006, along with a hydrogen chloride recycling unit for the production of chlorine, a precursor for MDI, that was added in 2018. 

BASF, together with Shanghai Hua Yi and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd, will own and operate the MDI plant that was added in 2018, including the manufacturing facilities for the precursors aniline and nitrobenzene. All employees currently employed in the joint venture will be transferred to the respective organizations. The new operational setup is in preparation and is expected to become effective during the fourth quarter of 2023, and is subject to pending regulatory authority approvals, permits and other customary closing conditions.

About SLIC and its MDI Plant

Shanghai Lianheng Isocyanate Co., Ltd. (SLIC) is a joint venture co-founded by Huntsman, BASF, Shanghai Chlor-Alkali Chemical Co., Ltd, Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd, and Shanghai Hua Yi (Group) Company, in the ratio of 35%, 35%, 15%, 7%, and 8% respectively.

SLIC Phase I MDI Project: The project has an initial production capacity of 240 ktpa of crude MDI and includes manufacturing facilities for the precursors, producing 240 ktpa of nitrobenzene and 180 ktpa of aniline. All crude MDI products were supplied to Huntsman and BASF for refining. The Phase I project passed the environmental impact assessment in February 2008 and achieved normal production. Subsequently, with the continuous increase in demand for crude MDI, the plant underwent modifications to increase the unit production capacity, shorten the annual inspection time, and extend the annual production time. The production capacity gradually increased from 240 ktpa to 350 ktpa. In September 2017, the Phase-I 350 ktpa crude MDI project passed the acceptance inspection and has been in operation since then. The Phase-I project was built on Huntsman’s process technology. After the spin-off, the 350 ktpa crude MDI plant will be operated by Huntsman.

SLIC Phase II MDI Project: The project, with an initial production capacity of 240 ktpa of crude MDI, was proposed by Huntsman in 2009, and it involved adding a 240 ktpa crude MDI production and refining plant within the existing site. The project commenced in 2014 and was completed by the end of 2017. Production began in the first quarter of 2018, with all crude MDI products from the Phase II plant being supplied to the refining facilities of Huntsman. After the spin-off, the Phase II 240 ktpa crude MDI plant will be operated by BASF.

BASF

“The SLIC joint venture has been an important partnership to establish MDI production in China as one of the pioneers at the Shanghai Chemical Park,” said Ramkumar Dhruva, President Monomers division at BASF. “The new organizational setup will allow BASF and our partners Shanghai Hua Yi and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. to further develop our MDI operations in Shanghai while serving the demand of our customers in the region even more effectively.”

Following the restructuring of the joint venture, BASF’s crude MDI capacity in China will reach 640 ktpa. Globally, its capacity will increase to 1.73 mtpa. Additionally, the increase in crude MDI capacity will provide more raw materials for BASF’s ongoing 90 ktpa MDI refining project, which is under construction.

Huntsman

“Through the production of crude MDI in the SLIC joint venture over almost 20 years, Huntsman together with its partner, Shanghai Chlor-Alkali Chemical Co., Ltd, has been able to successfully build its polyurethanes business in China. As we move to integrate these assets into our downstream operations, we will be even better positioned to meet the future innovation and growth needs of our customers,” said Tony Hankins, President of Huntsman Polyurethanes.

After the spin-off, Huntsman’s crude MDI capacity in China will be adjusted to 350 ktpa. Although there is a slight reduction in crude MDI capacity, the actual impact on Huntsman’s overall production is minimal. Huntsman will continue to focus on the development and penetration of its specialty grades in downstream applications.