GERMANY'S BASF AG said yesterday it plans to build a new MDI plant in Chongqing, in west China, to tap the growing demand for the raw material for polyurethanes that can be used in refrigerators and footwear.

The new factory will have an annual capacity of 400,000 tons of crude MDI, or diphenylmethane diisocyanate. The German chemical firm said in a statement the plant will start operations in 2010.

A corresponding memorandum of cooperation on the project was signed yesterday by BASF, Chongqing Chemical & Pharmaceutical Holding (Group) Co and local authorities. But BASF didn't say how much would be invested on it.

"The market for polyurethanes in China is expected to grow at double-digit rates and will become the largest in the world within the next decade," said Jacques Delmoitiez, president of BASF's polyurethanes division, in the statement.

Last year, BASF, US-based Huntsman and three Chinese partners inaugurated a US$1 billion complex in Caojing, southwest Shanghai, to make isocyanates MDI and TDI which is also a raw material for polyurethanes. Polyurethanes are also used in the automotive and construction industries.

The Shanghai plant is capable of making 240,000 tons of crude MDI and 160,000 tons of TDI per year.

Global chemical giants are seeking investment opportunities for MDI and TDI in China, which has to import large portions of these raw materials for its needs.

BASF's sales in 2006 rose to 3.6 billion euros (US$4.8 billion) in China, against 2.8 billion euros in 2005. It aims to generate 10 percent of its global sales and earnings in its chemical businesses in China by 2010.