EU approves Hungary state aid for €142m BorsodChem MDI intermediate plant

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Currently, MDI production at the BorsodChem site relies on aniline produced by the parent group and shipped to Europe from China.

The European Union has given the Hungarian government the green light to aid a €142m chemicals project planned by PVC and polyurethanes producer BorsodChem in the northeast of the country.

BorsodChem, owned by China’s Wanhua Chemical group, plans to construct a new plant to manufacture aniline, a precursor of PU intermediate methylene diphenyl diisocyanate (MDI) at its industrial complex at Kazincbarcika.

Currently, MDI production at the BorsodChem site relies on aniline produced by the parent group and shipped to Europe from China. The new plant that will increase the site’s vertical integration, is due to create another 50 jobs directly.

In its ruling, the European Commission concluded that job creation and investment by BorsodChem in underdeveloped north eastern Hungary, along with the environmental benefit of halting long distance shipments of the toxic chemical, outweighed any EU antitrust concerns.

The Commission found that, without public funding, the project would not have been carried out in Hungary or elsewhere in Europe as Wanhua found it cheaper to continue importing aniline from group operations in China.

It pointed out that the likely effects on competition were less significant because of BorsodChem’s limited European market position and the strong growth rate in the European and worldwide MDI markets.

EU Commissioners made clear that Hungary’s proposed €45m grant aid to the Kazincbarcika development was in fact the minimum sum possible to make the investment project viable.

In recent years, BorsodChem has been investing in upgrading and expanding parts of its production complex. One project, just coming to fruition now is the significant expansion of the site’s capacity to produce the other main PU intermediate toluene diisocyanate (TDI).

The firm aimed to double the output of its crystallisation unit in response to rising global demand for its ‘T65’ and ‘T100’ TDI grades. These grades are used chiefly in the PU industry for manufacturing flexible foams, coatings and adhesives.

Work on the new unit was begun last year and its start up was scheduled for the third quarter of 2018. At the end of last year, BorsodChem had a 250,000tpa capacity for TDI and 300,000tpa limit for MDI.

Besides the main Kazincbarcika chemicals complex, the company has a PU development centre to the south at Gödöllő in central Hungary.

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