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Dow Chemical selects locations for capacity expansion

By: Frank Esposito

August 27, 2013

Dow Chemical Co. has confirmed some new details of their plans to add capacity for polyethylene and related materials in the U.S. Gulf Coast.

Officials with Midland, Mich.-based Dow said in an Aug. 27 news release that the firm would increase capacity for Elite-brand enhanced polyethylene and Affinity-brand polyolefin plastomers at its massive complex in Freeport, Texas.

In Plaquemine, La., Dow will increase capacity for low density PE — including material sold under the Agility trade name — and for Nordel-brand metallocene EPDM.

Total new capacity generated by the investments will be more than 2 billion pounds per year. Individual capacity totals for separate materials were unavailable. As for the timing of the projects, officials only said “construction is scheduled to begin soon.” A new ethylene plant in Freeport that would provide feedstocks for these projects is set to open in 2017. A new propylene monomer plant there is set to open in 2015.

The range of products being expanded are sold into numerous applications, including food packaging, consumer packaging and telecommunications. Dow is investing a total of $4 billion in numerous Gulf Coast projects. These projects “will be highly cost-competitive, as they will incorporate our industry-leading technology and benefit from our flexible, advantaged feedstock position from the U.S. Gulf Coast,” a Dow spokeswoman said in an e-mail response to Plastics News.

The products being expanded all are part of Dow’s Performance Plastics unit. That unit ranked as the largest of Dow’s six operating units in the first half with sales of almost $7.2 billion. The Performance Plastics expansion projects will create 200 new full-time jobs, as well as up to 4,000 temporary construction jobs.

Dow estimates that its total Gulf Coast construction effort will create 6,000 construction jobs and 35,000 related jobs in the broader economy at peak construction.

The investments are expected to generate around $2.5 billion in pretax profit once fully operational. The expansions are “part of [Dow’s] focused investment strategy on the U.S. Gulf Coast to integrate advantaged shale gas,” officials said in the release. Several petrochemical firms are adding capacity for PE and other products throughout North America because of new supplies of shale gas that are being developed via hydraulic fracturing (fracking) and horizontal drilling.

“Our history on the U.S. Gulf Coast reaches back more than 70 years, and we’re proud to continue our commitment to this important region with these strategic and accretive investments,” Executive Vice President Jim Fitterling said in the release.

Dow posted sales of around $57 billion in 2012. In the first half of 2013, Dow’s sales roughly were flat vs. the year-ago period at just under $29 billion, but the firm’s profit more than doubled to $3.1 billion. Performance Plastics’ first-half sales total was down almost 2 percent from the first half of 2012, but the unit’s pretax profit soared 33 percent to almost $2 billion in the same comparison.

On Wall Street, Dow’s per-share stock price was near $37.50 in late trading Sept. 3 — up almost 16 percent so far in 2013. Dow ranks as one of the world’s largest producers of PE, as well as of several specialty plastics.