Dow Chemical Co. will terminate its North American supply agreement with Ashland Distribution on March 1, leaving the giant plastics maker with only two major resin distribution partners.
``We're looking at finding the right channels to our customers and at finding providers with compounding, blending, distribution and a global perspective,'' Dow spokeswoman Terri Johnson said Dec. 4.
Dow, based in Midland, Mich., is ``a significant supplier'' to Dublin, Ohio-based Ashland, according to Ashland spokesman Jim Vitak. In North America, Ashland bought $170 million of resin from Dow in Ashland's fiscal 2006, which ended Sept. 30. That represented about 5 percent of Ashland Distribution's materials purchases that year.
Ashland bought commodity plastics from Dow, including polyethylene and polypropylene, as well as elastomer-based products.
``While we regret Dow's decision, we are prepared to respond quickly,'' Ashland Distribution President Ted Harris said in a Dec. 4 news release. ``Because of our partnerships with a variety of global plastics manufacturers, we are prepared to offer our customers a range of conversion options to meet their performance, quality and delivery needs.''
Ashland ``will aggressively pursue retention'' of customers that may choose to continue using Dow plastics, Ashland officials added.
Dow's distribution contract with Ashland in Europe - where Ashland bought $60 million of Dow material in fiscal 2006 - is not affected by the North American decision. Dow's Johnson said that the firm hasn't made a decision regarding its European deal with Ashland. In the news release, Ashland officials said the European deal ``could at some point be impacted.''
Dow's resin distribution lineup now is limited to PolyOne Corp. of Avon Lake, Ohio; and a group of companies that includes Muehlstein Holding Corp. of Norwalk, Conn., and Ravago SA, the Belgian distributor that bought part of Muehlstein earlier this year.
Ravago also owns 49 percent of Entec Polymers LLC, a distributor and compounder in Maitland, Fla., that merged with resin distributor North America Group Inc. earlier this year. The Muehlstein/Ravago/Entec/North America Group combination has annual sales of more than $3 billion.
Ashland Distribution, a unit of specialty chemicals maker Ashland Inc. of Covington, Ky., has distributed plastic resin for Dow for almost 30 years. Ashland will continue to distribute other nonplastic chemical products for Dow.
In the first eight months of 2006, U.S. and Canadian PE sales to distributors increased almost 7 percent to about 920 million pounds, according to the American Plastics Council in Arlington, Va. For PP, U.S./Canadian sales to distributors rocketed 45 percent to almost 840 million pounds.