Huntsman, BASF and Chinese companies are in joint forces to open a $1 billion chemical factory in Shanghai, underscoring a rush of foreign investment into the sector amid expectations of continued growth in Chinese demand, The Wall Street Journal reported. The entity will make a raw material mainly used in foam insulation and plastic chairs. The partners say they are already planning its expansion. German chemicals group Bayer AG is at work on a $1.8 billion facility of its own that will produce the same chemical, called diphenylmethane diisocyanate, or MDI. A Chinese company has also entered the MDI market with its own Shanghai plant, wrote the paper. Industry officials say that China's housing and industrial growth is too encouraging to ignore, particularly for higher value-added products like MDI. "This is not even large enough for us to satisfy the Chinese market," said Peter Huntsman, president and chief executive of Huntsman Corp, “Continued high energy prices could even help the business by driving more Chinese to put insulation in their homes” Aside from growth in the Chinese market, the Huntsman-BASF group said building in the country was also appealing for tax concessions offered. The foreign investors said the chemical facilities were built to the same environmental specifications required for such plants in their home markets.