High utilisation, low inventories to offset propylene costs - Dow

03 February 2011 23:36  [Source: ICIS news]

HOUSTON (ICIS)--US-based Dow Chemical expects high utilisation rates and low inventories in its performance business to ultimately offset higher costs for propylene, executives said on Thursday.

Margins will dip slightly in the first quarter because of the lag producers typically have in passing through costs, said chief financial officer Bill Weideman during a Dow earnings conference call.

By the end of the first half of the year, Dow's performance business should offset the higher raw material costs, Weideman said.

The performance business can pass through the costs because it is running at high rates and because inventories are low, said Dow chief executive Andrew Liveris.

A lot of the performance businesses are sold out, he said.

Dow attained "across-the-board price increases in most of the performance businesses that have price sensitivity - especially those in chains like MDI [methyl di-p-phenylene isocyanate], like acrylic acid and esters and epichlorohydrin, epoxy", Liveris said.

Operating conditions should remain tight, Liveris said. By the end of the year, margins should actually increase.

Dow's performance businesses produce polyurethanes, oxygenated solvents, amines, epoxy resins, acrylates, methacrylates, polyglycols and surfactants.

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By: Al Greenwood
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