US Dow expects margin boost from cheaper propylene

27 October 2011 18:36  [Source: ICIS news]

HOUSTON (ICIS)--US-based Dow Chemical expects its margins to increase for its propylene-based products because of high inventories for the monomer, the company's chief executive said on Thursday.

Already, the high inventories have caused US propylene prices to fall by 14 cents/lb ($309/tonne, €222/tonne) in October.

In the US, propylene inventories reached 3.629m bbl for the week that ended on 21 October, a 33-month high.

The rise in inventories was caused by lower propylene demand, especially for commodity end products such as polypropylene (PP), said Andrew Liveris, Dow chief executive.

Liveris made his comments during an earnings conference call.

Dow has sold its PP business to Braskem, so it is no longer producing the resin.

However, Dow does make other propylene-based materials, and these have higher margins.

Since it will take some time to work down inventories, margins for Dow's propylene-based products should expand in the next six to nine months, Liveris said.

($1 = €0.72)

For more on propylene visit ICIS chemical intelligence
For more on Dow visit ICIS company intelligence

By: Al Greenwood
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