US Dow open to ‘asset-light’ JV for new cracker - CEO

28 April 2011 18:31  [Source: ICIS news]

NEW YORK (ICIS) US-based Dow Chemical is willing to extend its asset-light strategy to its latest cracker project if it can find suitable partners, CEO Andrew Liveris said during a conference call on Thursday.

On 21 April, Dow announced a major upstream expansion program, including the construction of a new ethylene cracker on the US Gulf Coast by 2017, the restart of an ethylene facility in Louisiana by 2012, and the expansion of ethane feedstock capabilities at two other ethylene facilities.

As an example, Liveris noted that in the Dow-Mitsui joint venture agreement, completed in December 2010, the companies will build the US chlor-alkali plant together, with Dow taking some of the chlorine for internal use, and converting the rest of the chlorine to EDC and VCM for Japan’s Mitsui.

Dow also announced it is exploring an option to commercialize its own technology to produce propylene from propane, with the potential start-up of a new production unit in 2018.

Integration upstream is critical to long-term profitability in specialty chemicals and materials, Liveris noted.

“What we’re doing now is accelerating our back-integration so that we do not have ‘propylene buy’. We buy 50% of our US propylene needs – that’s not sustainable,” said Liveris.

“The [advantaged] propane dynamic is what we’re now taking advantage of [on the propylene side],” he added.

Dow is also taking advantage of low-cost ethane feedstock for ethylene production, which is also used in downstream products such as ethylene oxide (EO) and derivatives, said Liveris.

“We can’t continue to be a buyer of ethylene for those downstream businesses,” he said.

The restart of the ethylene cracker and the expansion of ethane feedstock capabilities is targeted for integration, while the new cracker is targeted for growth, the CEO noted.

“We believe the US is entering a growth phase for performance business, and to support this and our advanced materials business, we need to back-integrate,” said Liveris.

“The specialty chemical graveyard is littered with companies that didn’t understand the importance of integration,” he said.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

Author: Joe Chang

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