US Dow expects Q2 earnings to beat consensus by up to $500m

Al Greenwood


HOUSTON (ICIS)–Dow expects to beat the market consensus for the second quarter by $400m-500m for adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), the CEO revealed on Thursday.

Second-quarter revenue and income should rise in all of Dow’s segments versus the first quarter, said Jim Fitterling. He made his comments during the Bernstein Strategic Decisions Conference.

Many of Dow’s biggest end markets are reaching multi-year highs, Fitterling noted.

In April, US vehicle sales sales reached their highest level since July 2015, he added before pointing out that housing starts in the US are tracking at their highest level in more than a decade.

Manufacturing expanded for the eleventh consecutive month, according to the purchasing managers’ index (PMI), he said.

Fitterling also argues that there is potential for more growth because most sectors have yet to return to their pre-pandemic levels. He sees the most potential in the services, travel and industrial sectors. In fact, the US industrial production index and the industrial capacity utilisation remain below their levels before the pandemic.

As other parts of the economy return to pre-coronavirus levels, oil demand should also rise to levels seen before the pandemic struck, if not exceed them, he said.

With that, Dow expects its margins to benefit from strong demand, higher raw-material costs and low inventories.

For the second half of 2021, Dow expects demand to remain strong and inventories to stay tight. Companies will continue to contend with the backlog of customer orders and supply pressures that were caused by winter storm Uri in mid-February.

Demand for polyethylene (PE) has remained strong throughout the pandemic, Fitterling said. In fact, he noted that the market has absorbed the large amount of new capacity that companies have started up in the past four years.

US inventories are very low even though exports are down, Fitterliing said. Some grades of PE are tight because of limited supplies in additives and other raw materials such as co-monomers.

PE is used in packaging, and he expects demand from travel, food processing and hospitality to increase as the economy continues to open up. Similarly, consumer demand could decline.

New PE plants currently being developed could face delays and will not start up as quickly as expected, Fitterling said.

While Asia is adding a lot of new capacity, it is the world’s fastest-growing demand region, and Fitterling expects it to continue to import material.


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