Covestro doubles down on Chinese market

Covestro, a leading supplier of high-end polymers, plans to continue investing and developing cutting-edge innovations in China – its single largest market in the world – given rising demand for sustainable solutions, a top executive said.

Thorsten Dreier, executive vice president and head of the Coatings and Adhesives segment at Covestro, said the firm set up an innovation center for product development in Shanghai to boost its research and development capacity for the local market.

"China is a very important market for us where we are continuously seeking to invest into our local production capacities and facilities," said Dreier. "We will invest in a new polyurethane dispersions plant in Shanghai, which should be up and running into 2024 and also build a polyester resin unit there."

Covestro is based in Leverkusen, Germany. The company manufactures raw materials for coatings and adhesives, in addition to polycarbonates and polyurethanes. It serves many industries, including the automotive, construction, furniture, electrical, and electronics.

Last April, Covestro completed the acquisition of the Resins & Functional Materials business (RFM) from the Dutch company Royal DSM. The transaction expands Covestro's portfolio of sustainable coating resins, making the group one of the world's leading providers in this market, the company said.

The integration of RFM will expand the group's revenues by around 1 billion euros ($1.13 billion) and will add more than 20 sites to its global production network, according to the company.

With the transaction, Covestro is expanding its business in several areas, from a leading global provider of water-based polyurethane dispersions to a broader range which includes water-based polyacrylate resins, as well as solid brands in terms of sustainability such as Niaga, solutions for additive manufacturing, and an advanced solar coatings business.

Covestro is enhancing its technology portfolio to cover water-based hybrid technologies, powder coating resins, and radiation curing resins, said the company.

In China, the deal also offers closer proximity to customers, contributing to overcoming challenges because of supply chain shortages during the pandemic, the executive said.

Dreier added the company has been working on solutions to reduce the carbon footprint of their products and supply chain to mitigate climate change and in response to the call for sustainable development.

The company has focused on reducing the carbon footprint of the raw material they buy and cutting the footprints of products they ship to customers.

For example, water-based solutions have seen a reduction of more than 40 percent in their carbon footprint compared to peer products.

"This is something that we will also continue to push where we are looking to becoming the sustainable solutions provider in the coating market," he said.

The company has provided a coating on car tops for a Chinese electric car producer in the country, leading to a reduction of carbon emissions by 30 percent, he added.