After a tumultuous 2020, materials giant Dow Inc. is seeking better days ahead in 2021.
Like many materials firms, Midland, Mich.-based Dow in 2020 saw demand for polyethylene and other materials decline and then recover. This demand recovery and tight supplies caused by hurricanes led to North American PE prices going up 19 cents per pound since May.
"The recovery in market demand was very strong and took some people by surprise," Packaging and Specialty Plastics President Diego Donoso said in a recent interview with Plastics News. "Demand kept improving as the year went on."
Back in late April, Dow idled PE plants in Freeport and Seadrift, Texas, and Bahia Blanca, Argentina — as well as elastomers plants in Plaquemine, La. — for at least a month before bringing them back online.
"Materials firms started to slow their reactors, so inventory wasn't there and companies' budgets were reduced to accommodate uncertainty," Donoso said. "Then when demand came back, everyone realized the pipeline wasn't full."
The packaging sector — a major one for PE demand — "never suffered a downfall," according to Donoso. Packaging "grew month over month with no effect on volumes," he said.
"The market will be more robust next year because of what has happened this year. Even more of a focus on recycling will result in more polyethylene being used, not less."
With PE in tight supply in many regions of the world, Donoso said the behavior the inventory chain is very important. "There's a lot of management of matching supply and demand across world," he said. "We need to know what our customers need so we can supply them."
Dow and other North American PE makers have been able to export "as much as we needed to," even during the pandemic, Donoso said. Dow and other firms in recent years have added large amounts of PE capacity in North America to take advantage of low-priced shale gas feedstock in the region. Much of this new capacity has been targeted at foreign markets.
"U.S.-China and U.S.-Asia logistics have some of the most efficient infrastructures in the world," Donoso said. "The U.S. is set to be an export-oriented [PE] industry. Export is strategic — it's not an outlet valve."
In 2021, PE demand growth should be higher than that of GDP, according to Donoso. Research firm IHS Markit expects global GDP growth of 4.4 percent for 2021.
Dow also remains focused on sustainability. In June, the firm announced aggressive new commitments to address plastic waste and climate change.
Dow aims to collect, reuse or recycle more than 2 billion pounds of plastics by 2030. The firm also plans to have all of its products sold into packaging to be reusable or recyclable by 2035 and to achieve carbon neutrality by 2035.
"We're interested in many forms of sustainability," Donoso said. "We can redesign structures to incorporate recycling. I think we'll see more of that."
Dow's R&D efforts also are focused on sustainability.
"We're seeing what we can do with our resins in packaging to improve recyclability for converters and brand owners," Donoso said.
In the first nine months of 2020, Dow's packaging and specialty plastics sales — including PE — were down 14 percent to $13.2 billion. The firm's total corporate sales were down 15 percent to $27.8 billion.
In July, Dow reacted to reduced sales with plans to cut 6 percent of its workforce and to cut costs by an additional $150 million in 2020. On Wall Street, Dow's per-share stock price began the year around $52 but fell under $27 in early March amid pandemic uncertainty. The price has since recovered and was near $54 in late trading Dec. 17.
Dow is one of the world's largest producers of polyethylene and specialty resins and chemicals. The firm posted sales of $43 billion in 2019.