Shutdowns loom in world epoxy market – US Dow

31 January 2013 22:43  [Source: ICIS news]

HOUSTON (ICIS)--The world has too much epoxy-resin capacity, and some companies will likely take some of that capacity off line, the chief executive of US-based Dow Chemical said on Thursday.

"On epoxy, the Chinese just overbuilt, that plus the Taiwanese and the Koreans," said Andrew Liveris, Dow CEO. He made his comments during an earnings conference call.

"Epoxy will continue to be oversupplied, and frankly, there needs to be capacity taken out. Capacity will need to come out," Liveris said.

"We've done some of it, and others will do it as well," he said.

In October, Dow announced it would close an epoxy-resins plant in Kina Ura, Japan.

Epoxy resins fall under Dow's performance-materials segment, which the company is intent on improving, Liveris said.

Fourth-quarter sales for the segment were $3.4bn (€2.5bn), down 5% year on year, the company said.

Epoxy resins and the entire polyurethanes chain are the two key parts of the segment that are underperforming, Liveris said.

He attributed part of this underperformance to volatility in prices for propylene, a key feedstock for polyether polyols, which are used to make polyurethanes.

In the US alone, propylene has been subject to wide swings for several months.

Recently, the US January contract for propylene settled at an increase of 15 cents/lb ($331/tonne). A US propylene producer nominated a 9-cent/lb increase for February.

Ultimately, volatile propylene should be addressed by Dow's new propane dehydrogenation (PDH) plant, Liveris said.

The 750,000 tonne/year unit should start operations in 2015 at its Freeport complex in Texas.

Dow's polyurethanes business should also benefit by the start-up of the company's Sadara petrochemical joint venture in Saudi Arabia.

That complex, which Dow is developing with Saudi Aramco, will include units that produce ethylene, propylene, solution polyethylene (PE), low density PE (LDPE), elastomers, amines, glycol ethers, propylene glycol, polyether polyols and isocyanates.

Ultimately, the start-up of the Sadara complex in Saudi Arabia and the PDH plant in Texas should benefit the performance-materials segment, Liveris said.

In the meantime, Dow will attempt to improve the segment's performance through price action, which could lead to volume losses, Liveris said.

That, in turn, could cause more assets to go down, he said. "We have to intervene on high-cost assets in low-growth jurisdictions."

Liveris added, "We are going to put laser-like focus because we are unsatisfied, dissatisfied, with the last two years in performance, and it's creating headwinds that speak against the positive side of the Dow portfolio."

He said, "We are determined to fix those two businesses and do it in a short order."

Additional reporting by William Lemos

($1 = €0.74)


By: Al Greenwood
+1 713 525 2645



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