Covestro expansion highlights company's complementary green vision

After decades of growth in China, Covestro, a leading German materials manufacturer, is poised to continue its triumphant journey, fueled by the conviction that its vision of achieving full circularity perfectly aligns with China's ambitious development agenda.

"Throughout the years, we have nurtured a close partnership with China, investing in production, innovation and a talented workforce here. It is imperative that we forge ahead together, confronting the colossal challenges our world faces, notably climate change," said Markus Steilemann, CEO of Covestro. Steilemann, who is based in Leverkusen, Germany, possesses firsthand experience navigating the local landscape from his stint in China.

China has demonstrated its unwavering commitment to combat climate change, boldly setting goals to attain peak carbon emissions by 2030 and carbon neutrality by 2060. Covestro stands resolutely geared towards enabling a truly sustainable future and embracing the circular economy. With an audacious aim of achieving operational climate neutrality by 2035, Covestro takes the lead in driving change and promoting a thriving green paradigm.

"By doing so, we are closely aligned with China's vision for high-quality development and its ambitious dual-carbon goals. I eagerly anticipate further collaboration with our partners in China, leveraging our profound expertise in materials, particularly circular solutions, to actively contribute to China's pursuit of high-quality and sustainable development," Steilemann added.

Key growth market

After more than two decades of dedicated investment in China, Covestro has made the country one of its pivotal markets and home to many vital assets. In the past year alone, approximately one-fifth of the company's sales were generated from China, while its accumulated investment in the nation has surpassed 3.9 billion euros ($4.26 billion). The majority of these investments have been channeled into Covestro's integrated production site in Shanghai.

In 2001, Covestro embarked on the construction of this expansive production site on the outskirts of Shanghai. Today, it stands as Covestro's largest site, comprising 11 plants and the company's first technical center hub beyond Europe, focusing on cutting-edge process technologies. Furthermore, by the end of this year, an additional three plants will be completed within the integrated site, further bolstering the company's capacity to cater to burgeoning markets.

In 2021, Covestro's Shanghai site achieved a significant milestone by receiving the prestigious ISCC PLUS mass balance certification. With this certification, the site can provide customers with substantial product volumes sourced from renewable-attributed materials. As a result, Covestro will further bolster the low-carbon progression of its diverse range of downstream customers in China, spanning from automotive manufacturers to mattress producers and shoe brands.

Due to its sheer magnitude, the site itself is anticipated to make a substantial contribution to the group's ambitious climate objectives.

Under a momentous agreement inked in 2022, Chinese producer CGN New Energy will annually supply 300 gigawatt-hours of green power derived from its wind and solar farms to Covestro's Shanghai site. This sustainable energy supply will account for 30 percent of the site's electricity needs. Looking ahead to 2023, renewable power is set to cover half of the Shanghai site's total electricity consumption.

Strong presence

The significance of China in Covestro's business cannot be overstated. Beyond its production site, Shanghai serves as the comprehensive regional headquarters for Covestro, housing essential entities such as the global headquarters for its Engineering Plastics Business Entity and the Asia Pacific Innovation Hub. Over several years, the regional headquarters have consistently thrived, underscoring the company's dedication to this market.

At the innovation hub, achievements abound, with one notable accomplishment being the development of a polyurethane resin for the fabrication of wind turbine blades — an exemplary demonstration of how innovation in China has a global effect. These blades have reshaped the industry by offering superior mechanical properties, an efficient production process and a more cost-effective solution compared to conventional fiberglass-reinforced epoxy blades.

The growth story extends far beyond Shanghai. Covestro has recently announced its selection of Zhuhai, a city in South China's Guangdong province, as the future location for its largest production site worldwide dedicated to thermoplastic polyurethanes, or TPU.

With a total investment reaching the 100 million Euro mark, the Zhuhai site is projected to wrap up construction by 2033, and it will boast a production capacity of nearly 120,000 metric tons of TPU annually. TPU is an exceptionally versatile plastic material, showcasing its remarkable adaptability driven by diverse properties across a wide spectrum of applications, including sports shoe soles, IT devices like sweepers, smart speakers, phone cases, as well as various automotive applications.

Asia, and specifically China, represents the primary market for TPU, with substantial growth prospects. Covestro's strategic investment in the Zhuhai site demonstrates the company's commitment to ensuring long-term success alongside its customers and partners.

Forging partnerships

Following two highly successful appearances at the China International Import Expo in 2021 and 2022, Covestro has announced its participation in this year's event. Leveraging the expo as an exceptional platform, the company aims to amplify awareness regarding the growing imperative for sustainability measures while fostering new relationships to champion this cause.

"Through our engagement at the CIIE, we have effectively connected with partners across the entire value chain and engaged directly with end consumers," said Holly Lei, president of Covestro China. "The CIIE serves as an all-in-one platform, enabling us to cultivate collaborations, establish partnerships and showcase our cutting-edge technologies and solutions that drive the advancement of a circular economy."

The opportunity presented at the CIIE was also met with appreciation by Covestro's partners. Sinomax, a Hong Kong-based manufacturer of comfort products, unveiled its inaugural low-carbon mattress to the global audience at Covestro's booth during 2022's event. This groundbreaking mattress incorporates sustainable raw materials sourced from Covestro.

"We look forward to another successful CIIE, where we will continue to empower our Chinese partners with the necessary resources to become shining examples of sustainability on a global scale," Lei added.