Dow Chemical Co.'s plastics business has a full agenda for 2019 as it prepares to separate from DowDuPont Inc.
Midland, Mich.-based Dow will become its own publicly traded entity again in early April, less than three years after it merged with fellow plastics and chemicals giant DuPont Co. of Wilmington, Del. DuPont also will become independent, as will a third firm with some units from both Dow and DuPont.
Dow Packaging and Specialty Plastics President Diego Donoso recently spoke to Plastics News about new developments for the polyethylene resin market and about sustainability challenges facing the industry.
Dow and several other PE makers have added capacity in North America in recent years to take advantage of low-priced feedstock from shale gas and oil. Much of this new capacity has been slated for export, but retaliatory tariffs placed on U.S. resin by China caused a change in destination.
Donoso described 2018 as "a rebalancing year, with new capacity and tariffs … but we found new destinations and the capacity was absorbed."
"We've basically been sold out [of PE resin] across the board for many months," he added. "2019 is expected to be solid, but it could be great. We're not matching what we need in new capacity to keep up with global [PE] demand growth. We were before, but we're not now.
"This year, the market is adding much less new capacity, so supply could be more tight," said Donoso, who joined Dow in 1991 and has held his current title since 2012.
In the future, he added, North America will join the Middle East in becoming an exporting region for PE.
"The world is humming along," Donoso said. "We'll ship more [PE] to Europe, and Southeast Asia and China will need more."
Beyond 2019, more PE capacity additions are scheduled for North America, including Shell Chemicals' surprising decision to place a petrochemicals unit outside of Pittsburgh, near shale deposits. Almost all existing North American PE production is located on the U.S. Gulf Coast or in Canada.
"Whether this new capacity is in Pennsylvania or the Gulf or Canada, they're all very well connected via rail, so it will be absorbed by the market," Donoso said. "Exports have access to go anywhere."
On the sustainability front, Dow is a founding member of the Alliance to End Plastic Waste, an industry group that launched earlier this month. Dow is one of almost 30 companies that have pledged a total of more than $1 billion to help tackle the ocean plastics problem. Alliance founders include companies all along the plastics value chain.
"We have to acknowledge that the world has a [plastic] waste problem," Donoso said. "We don't think bans will solve the issue. We need to invest in infrastructure and stop leakage at the source."
He added that future efforts from Dow and other firms will include investments in mechanical recycling, chemical recycling and waste management. Some of Dow's customers already have come to Dow and to brand owners with waste reduction solutions, Donoso said. One Dow customer found a way to use recycled high density PE milk containers in making plastic pipe.
"We have to work together to solve the problem, and I think we will," he added.
