US Dow to hang on to polyethylene business for now - Liveris

03 August 2010 22:31  [Source: ICIS news]

HOUSTON (ICIS)--US major Dow Chemical is still interested in pursuing a polyethylene (PE) joint venture, but only at a premium price, as cheap US feedstocks continue to boost profits for the business, chief executive Andrew Liveris said on Tuesday.

For the most part, Dow's US plants produce PE from natural-gas-derived ethylene, giving the company a cost advantage from producers that rely on naphtha-based feedstock.

"We have the most competitive ethylene and polyethylene business in the industry," Liveris said during an earnings conference call.

New US shale-gas reserves would strengthen that advantage, Liveris said.

Dow has created several basic-chemicals joint ventures as part of its so-called asset-light strategy. Under it, Dow established joint ventures to reduce capital requirements.

"We're definitely very interested in a polyethylene asset-light, equity-light strategy for the right reason with the right partner for the right competitive advantage on existing assets and new assets," Liveris said.

"We are driven to get an answer there, but we have a new-found competitive advantage with US shale gas," he said. "Once we execute that strategy, we will do it at the highest possible valuations, going into peak earnings rather than living through trough earnings."

Liveris made similar comments during the company's first-quarter earnings conference call.

Dow came close to establishing a plastics joint venture in 2007.

Back then, Dow and Petrochemical Industries Co (PIC) of Kuwait agreed to create a $17.4bn (€13.2bn) joint venture that would make PE, polypropylene (PP) and polycarbonate (PC), among others.

The so-called K-Dow joint venture with PIC fell apart at the end of 2008.

The break-up is being arbitrated, and Liveris expects an outcome in early 2011, he said.

($1 = €0.76)

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By: Al Greenwood
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