Dow Chemical moving ahead with polyethylene investments

By Frank Esposito
Senior Staff Reporter

Published: March 19, 2014 11:34 am ET
Updated: March 19, 2014 5:34 pm ET

Image By: Dow Chemical Co. Andrew Liveris

Related to this story

Topics Materials, Materials Suppliers
Companies & Associations Dow Chemical Co.

Dow Chemical Co. is moving ahead with plans to add capacity for polyethylene and related feedstocks in the U.S. Gulf Coast and in Saudi Arabia.

“We’re the only company to have two projects in the two lowest-cost areas simultaneously,” Dow Chairman and CEO Andrew Liveris said in a March 19 conference call from Jubail, Saudi Arabia. Jubail is the site of Dow’s Sadara joint venture with state-owned Saudi Aramco of Riyadh, Saudi Arabia.

Sadara’s first units are expected to come online in the second half of 2015. The site eventually will have almost 7 billion pounds of annual capacities for PE, polyurethanes, elastomers and related products. Work on Sadara has involved 44,000 workers, Liveris said, adding that work on the overall project is 45 percent complete, including 65 percent completion of its olefins units.

In Freeport, Texas, Midland, Mich.-based Dow is taking advantage of U.S. shale gas supplies to embark on a major PE and ethylene expansion. The firm currently has 1,700 workers on site, with that amount expected to double by the end of the year. New PE and ethylene production is expected to come online in 2017. Construction of a PDH-based propylene unit already is 20 percent complete, Liveris said.

Dow also expects to reduce costs in its Performance Plastics unit — including PE — by $40 million in the 2014-15 period. The sale or spinoff of Dow’s epoxy resin and chlorine-based business also is underway and should be complete by the end of 2015, Liveris added.

During the call, Liveris — a 38-year Dow veteran who has served as the firm’s CEO since 2004 — pointed out that Dow’s actions “are occurring in what’s been a difficult economy.”

“We didn’t just maintain ourselves, we rebuilt our enterprise with the purpose of driving long-term, sustainable growth,” he said.

Other recent Dow accomplishments cited by Liveris included:

• Achieving record cash flow from operations and reducing debt by $3 billion in 2013.

• Investing on average $1.7 billion per year on R&D from 2006-13.

• Receiving more than 560 patents in 2013, the most in Dow’s 116-year history.

• Generating more than 20 percent of 2013 revenue from patent-advantaged products.

Looking ahead, Liveris said that when Dow’s new North American PE capacity comes online in 2017, he expects that most of it will be consumed in the U.S., with some going to Latin America and very little to the Far East. He added that the new North American PE won’t be competing with material made that Sadara JV, but that Sadara material “will be taking sales from the high-cost guys” in Japan, Taiwan and China.

Liveris added that Dow is not likely to make any major acquisitions in the near future. “The company has organic growth coming out of its ears,” he said. “We don’t have to acquire anything of any size.”

First-quarter sales for Dow and many other firms were affected by extreme cold weather throughout much of the U.S. “The North American carrier fleet in the Northeast was disabled,” Liveris said. “And the consumer hasn’t gone out there and bought in normal patterns. We can expect a slow first quarter, but not onward from here.”

He added that the economic outlook for China “isn’t as strong as it usually is,” and that 2015, 2016 and 2017 “are looking like peak years” for the global petrochemicals market.

Liveris described 2014 as “a bridge year in a slow-growth world,” one that will lead to “key projects and startups” in 2015. He added that he believes that Dow’s per-share stock price “is undervalued at close to $50.”

Already in 2014, Dow has weathered criticism from investor Third Point LLC, which said that Dow had “a poor operational track record” and suggested spinning off Dow’s petrochemical business into a separate public company. Liveris defended Dow’s strategy, and was backed up by legendary investor Warren Buffett and by credit rating firm Moody’s Investor Service.

Dow ranks as one of the world’s largest makers of plastics and chemicals. The firm employs about 53,000 worldwide and posted sales of $57.1 billion in 2013. Dow’s 2013 sales were up less than one percent vs. 2012, but the firm’s profit increased more than four times to $4.8 billion.


Comments

Dow Chemical moving ahead with polyethylene investments

By Frank Esposito
Senior Staff Reporter

Published: March 19, 2014 11:34 am ET
Updated: March 19, 2014 5:34 pm ET

Post Your Comments


Back to story


More stories

Image

Minnesota receives grant to help develop new bioplastics

September 17, 2014 4:08 pm ET

The University of Minnesota has received a $20 million grant to fund the development of new types of bioplastics.    More

Image

China's Polymax Elastomer launches U.S. production in Illinois

September 17, 2014 3:35 pm ET

Chinese materials maker Polymax Elastomer Technology Co. Ltd. has opened a North American production site and headquarters in Waukegan, Ill.    More

Image

PolyOne helps nonprofit get water purification to more places in need

September 17, 2014 1:59 pm ET

Resin giant PolyOne Corp. is teaming up with WaterStep, a non-profit water purification agency, to help the group assist a greater number of disaster ...    More

Image

ACI expanding in South Carolina

September 17, 2014 12:56 pm ET

Reprocessor and recycler ACI Plastics Inc. is expanding in South Carolina.    More

Image

Symphony Environmental defends biodegradable plastics in recycling stream

September 17, 2014 11:47 am ET

Symphony Environmental Technologies plc, one of the world's largest oxo-biodegradable technology companies, has responded to a leading Mexican recycle...    More

Market Reports

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook – North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events