Dow CEO touts cost position in Terneuzen, Tarragona sites amid tough European outlook

HOUSTON (ICIS)–Dow’s operations in Terneuzen, the Netherlands, and Tarragona, Spain, have attractive costs for a region that is struggling to remain competitive against other parts of the world with cheaper energy, the CEO said on Thursday.

Dow has crackers at both sites, and they can use imported liquefied petroleum gas (LPG) as feedstock to produce ethylene. The imports give the crackers a cost advantage.

“Terneuzen and Tarragona are in great cost positions, and both of those countries, the Netherlands and Spain, have good energy policies,” said Dow CEO Jim Fitterling. He made his comments during an investor day presentation.

“Going forward, I feel good about how they are going to wind up, and we have good plans there,” he said. “We have good line of sight to keep cost competitiveness.”

The company mentioned cracking more LPG at Terneuzen to lower its costs.

Exports of LPG should increase from the US in the next couple of years as midstream companies complete terminal expansions. The US Gulf Coast is running out of export capacity to handle growing amounts of propane being produced in the country.

EUROPE LACKS COST POSITION TO EXPORT
Other companies are selling European businesses or shutting down plants because of excess global capacity and high costs.

Fitterling sees no signs that Europe is considering any policies that could address high energy costs.

“Europe is focused more on the stick, on carbon emissions reductions,” he said. “They are not focused at all on energy policy to drive down energy costs. Energy costs are going to continue to rise.”

Dow’s cost position does allow it to serve the domestic market, but it is not in Europe to export, Fitterling said. “Europe doesn’t have the cost position any more to export.”

Dow will continue find ways to improve its cost position at its European operations, he said. But the company’s growth investments will be in low-cost regions and in high value projects.