High polyethylene prices drove record results for Dow Inc. in the second quarter.
On a conference call with analysts, Chairman and CEO Jim Fitterling responded to several questions about the PE market and sustainability.
"I don't think you'll see a chance for us to build any [PE] inventory through the third quarter; there's still a fair number of planned turnarounds," he said. "Our view is with these GDP growth rates, over 6 percent for this year and currently forecasted at 4.5 percent, maybe 5 percent for next year, there's going to be quite a demand for polyethylene."
Fitterling added that with PE pricing, which has soared in the last 18 months, Dow "is still seeing some positive upward price movement on certain grades of product."
"High density [PE], for example, right now is pretty tight. … I think you're going to continue to see some price movement upward there," he said.
Midland, Mich.-based Dow on July 22 reported second-quarter sales of $13.9 billion, up 65 percent vs. the second quarter of 2020 — when the COVID-19 pandemic hit global markets — and up 17 percent vs. the first quarter of 2021. Dow also posted a profit of $1.9 billion for the quarter after losing $217 million in the same quarter in 2020.
Second-quarter sales in Dow's Packaging and Specialty Plastics unit, including one of the world's largest PE resin businesses, were up 78 percent vs. the year-ago quarter to $7.1 billion. That represented a gain of 16 percent over the previous quarter.
Officials said the P&SP unit's growth was tied to local price gains of 70 percent in industrial/consumer packaging and flexible food/beverage packaging applications. The unit's sales volumes declined year-over-year due to lower PE supply volumes from lingering effects of the February winter storm in Texas and planned maintenance turnarounds.
Dow's Industrial Intermediates and Infrastructure unit, including polyurethanes, saw second-quarter sales of $4.2 billion, up 75 percent vs. the year-ago quarter and 17 percent vs. the previous quarter. Officials said the unit's sales volumes increased by 15 percent as strong demand in infrastructure, mobility and furniture/bedding end markets was partially offset by supply constraints in solvents and intermediates.
On sustainability, Fitterling said that with the fact that plastic packaging "is so lightweight and so strong and is the lowest carbon footprint package out there, you're going to continue to see a drive toward that."
"For most companies, the shipping costs and the CO2 footprint, and the shipping cost will drive that," he added. "I just use a paper vs. plastic scenario in a grocery store. One truckload of plastic shopping bags would take four to five truckloads of paper bags to replace it.
"For many, many decades, [plastics demand growth] has been in that one and a half type of GDP growth rate. I think that will stay. There are some functional polymers that are made out of ethylene and polyethylene derivatives that are continuing to grow, materials for construction that are positive," he said. "You're going to see growth in some other applications like products that go into alternative energy, both solar panels for encapsulation, wind blades and other types of applications. So I think we can sustain that over a long period of time, which is positive."
