Huntsman Corp., along with chemicals giant BASF AG and a group of Chinese companies, announced W ednesday that they may build a plant in China to meet growing demand for a chemical used in everything from padded steering wheels to basketball shoes.

The companies are looking at several sites for the plant, Salt Lake-based Huntsman said Wednesday. However, tentative plans call for a plant with a capacity of 400,000 tons per year of crude diphenylmethane diisocyanate (MDI) to be sold and marketed separately by Huntsman and BASF starting in 2010.

MDI is the primary ingredient, or precursor, in polyurethanes, which are used in the automotive and construction industries, in appliances and shoes.

"The market for polyurethanes in China is growing at double-digit rates, and this is expected to continue well into the next decade," Tony Hankins, president of Huntsman's polyurethanes division, said in a prepared statement. "We are a leading player in this dynamic market, and the proposed investment will complement our new MDI facility in Caojing, strengthening our ability to serve customers through local production."

Work is already under way on a similar plant at the Shanghai Chemical Industry Park in Caojing, a suburb of Shanghai, Huntsman spokesman Don Olsen said. That project is proceeding as scheduled and is expected to be operational by midyear, the company said. It is also a team effort of Huntsman, BASF and the Chinese group.

"We already have one project under way over there with BASF and the Chinese companies and have found that there are a lot of synergies to be had between us," Olsen said. "China is one of the premiere, if not the premiere, emerging economy. To pair with BASF and especially the Chinese partners just makes good business sense. It's better, it's more practical and economical to do it this way instead of doing it alone."

It's unclear how much the new facility will cost because a specific site hasn't been chosen yet, Olsen said. He declined to speculate on when one would be selected, except to say that "obviously, we want to do it as soon as possible."

"Whether it's in China or Texas, you have to be sure that the business conditions are right before you move ahead with any major venture of this nature," Olsen said. "But China is a very, very exciting market, which is why we're looking to put it (the plant) there."

The project currently underway will have a capacity of 240,000 metric tons per year of crude MDI, Huntsman Corp. said. The total cost for that facility is estimated to be about $1 billion.

The companies are expanding in China to keep pace with Bayer AG, the world's largest producer of polyurethanes. Bayer is adding 350,000 tons of capacity at its Caojing plant starting in 2008, which will raise the company's output of the product to 1.3 million tons a year.

Though headquartered in Salt Lake City, Huntsman Corp.'s corporate offices are in Texas. The company has about 11,300 employees, with 57 operations in 22 countries. In 2004, Huntsman reported revenues of $11.5 billion.


Contributing: Bloomberg News

E-mail: jnii@desnews.com