Dow warns of need for “radical actions”

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Andrew Liveris, Dow CEO, has consistently warned that we are facing a major recession. Today, in a Bloomberg interview, he spells out the need for “radical actions” to “take out capacity”.

He notes that Dow’s volumes are down 10%-20% this quarter, and expects this to continue into H1 next year. And he forecasts that “we could be looking at a couple of years of trough and severe correction”.

Liveris says that Dow’s prices for PE and PP have fallen 40% since September. And he warns that “holding prices in the commodities is going to be near impossible in the next 3 to 6 months”. He adds that demand is falling in all the major regions of the world simultaneously. “To see a global contagion of this order of magnitude, I think that is what we are currently living, and that is probably unprecedented,” Liveris said.

Liveris’ view is that plant closures of older and higher-cost plants are inevitable. Otherwise, the industry will find itself operating at “less than 80% of capacity as demand declines”. He expects that “Dow and others, I think, will be taking some radical actions to take out capacity”.

As the blog argued last month, survival is the key priority at the moment for many chemical companies. CEOs and Boards need to focus on developing and implementing major change management programmes as quickly as possible.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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