UpdateDow Chemical to shut down more plants in Louisiana

01 July 2009 17:02  [Source: ICIS news]

Dow to shut down more plants[Adds capacity details and additional comment from Dow in paragraphs 3-8]

LONDON  (ICIS news)--Dow Chemical’s board has approved a restructuring plan to shut down additional chemical plants in the US, the company said on Wednesday.

Chemical plants affected are an ethylene cracker in Hahnville, Louisiana; ethylene oxide/ethylene glycol plant, also in Hahnville; and an ethylene dichloride and vinyl chloride monomer facility in Plaquemine, Louisiana.

The ethylene unit at Hahnville, near Taft in Louisiana is a 310,000 tonne/year Union Carbide vintage unit and one of two at the site. It consumes 70% ethane feed but has been down since January due to mechanical problems.

The closure of the cracker and of the ethylene derivatives units in the US reflect a lower level of domestic derivatives demand, Dow global business director for hydrocarbon monomers Brian Ames told ICIS news.

Capacity is being taken out across the ethylene envelope, he said, so Dow can match output with demand.

“We have historic assets in the US built for both domestic and export opportunities. What we are saying now is that demand overall is lower than it used to be.”

Dow has invested in its US crackers and added feedstock infrastructure, to improve their cost competitiveness, Ames said, and is boosting capacity in the Middle East and in Thailand.

Before the recently announced plant closures the company was consuming 12m tonnes/year of ethylene and producing 10.5m tonnes/year. Following the derivatives plant closures in the US it will no longer need to purchase ethylene on the merchant market.

Dow's shutdowns were in addition to numerous other ethylene-derivative closures Dow implemented as part of a restructuring programme announced in the 2008 fourth quarter, it said.

Under the 2008 programme, Dow already shut a number of production units, it said.

These included a production unit in Seadrift, Texas, for hydrocarbon rubber ceased production; a low density polyethylene unit in Freeport, Texas; a production unit in Plaquemine, Louisiana, for chlorinated polyethylene; and a styrene monomer production unit in Freeport, Texas.

The restructuring was in line with Dow’s commitment to achieve $1.3bn (€923m) synergies on its acquisition of Rohm and Haas, it said.

The plan included a charge for the elimination of approximately 2,500 positions, which had been previously announced, it added.

"Consistent with Dow's practice of active portfolio management, we continue to take quick and aggressive action to right-size our manufacturing footprint, particularly in our basics portfolio," CEO Andrew Liveris said.

Additional reporting by Stefan Baumgarten

($1 = €0.71)

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By: Nigel Davis
+44 20 8652 3214

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