US Dow's polyurethanes should benefit from new PDH unit, Sadara

25 July 2013 21:22  [Source: ICIS news]

HOUSTON (ICIS)--US-based Dow Chemical's polyurethanes business should benefit from new plants being built in the US and Saudi Arabia, which should give the company access to low-cost feedstock, the CEO said on Thursday.

Polyurethanes are made with isocyanates and polyols. Polyols, in turn, use propylene oxide (PO) as a feedstock.

Volatile prices for propylene are hurting the business right now, said Andrew Liveris, Dow CEO. Liveris made his comments during an earnings conference call.

Dow plans to address volatile propylene costs by building a propane dehydrogenation (PDH) plant in Texas, which should start operations in 2015.

Unlike many sources of propylene, PDH units do not rely on oil-based feedstock. Instead, the units consume propane, and US supplies of propane should be long because of the advent of shale gas.

Propane-based propylene should address the volatility in propylene prices.

For isocyanates, the other major component of polyurethanes, Dow plans to build plants at the new Sadara complex in Saudi Arabia. Dow is building the complex through a joint venture with Saudi Aramco.

Like Dow's on-purpose propylene plant in the US, its isocyanates joint-venture plant should also be cost advantaged.

Sadara will have several other units in addition to isocyanates, with the first ones starting operations in 2015.

Regarding polyurethanes demand, the recovery in US housing should trickle down to bedding, furniture and spray foam, all of which consume the material, Liveris said.

China could also be a source of growing polyurethanes demand if it can successfully recalibrate its economy to boost domestic consumer demand, he said.

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By: Al Greenwood
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