Dow Sees China Growth Acceleration

By John Richardson

DOW Chemical CEO Andrew Liveris said in an earnings call, following the release of the company’s Q1 results: “China is stabilising and growth is likely to accelerate later this year as their government keeps shifting its policies to inspire and incentivise domestic growth.”

An industry observer agreed, and added: “I’m still sticking with the view that even if growth in China, and the rest of Asia, is not spectacular, it will be sufficient to support reasonable levels of income growth for 3 billion consumers of basic petrochemicals – whether it is in the form of food/consumer goods packaging, or in autos and residential construction etc.

“And given that announced capacity additions are low, and some will be delayed, the petrochemicals market will naturally tighten. We are looking at a multi-year upcycle.”

Dow’s first quarter net income fell 27.8% to $520m on weaker operating earnings and a restructuring charge.

However, Liveris added that the company had captured the tenth consecutive quarter of volume growth in emerging markets as it exited Q1 with momentum.

“Our sales in the United States, Germany and China all grew double digits from February to March, excluding the seasonality of our agricultural business,” he said.

“Importantly, this momentum is ahead of what we saw last year. We also saw sales grow double digits month-over-month in all of our operating segments.”

But growth could decelerate in China because of government policies and political instability. Auto and housing markets are struggling because of these policies, even if they might be doing better elsewhere in Asia.

The evidence from petrochemicals markets suggests that the widely expected recovery in growth during the second quarter has yet to happen.

For instance for the week ending 27 April, ICIS pricing assessed Asian polyethylene (PE) prices $20-40/tonne lower on weak buying interest, both in China and Southeast Asia.



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