Chems in longest slump in decades as tariffs stifle demand – Dow CEO

HOUSTON (ICIS)–The chemical industry is facing demand-stifling tariffs just as it is in one of its longest downturns in decades, the CEO of US-based Dow said on Thursday.

Dow expects Q2 sales will be about $10.4 billion, down from $10.9 billion reported in Q2 2024. The company has intensified its cost cutting measures, announced 1,500 job cuts and delayed its Path2Zero project in Canada.

“The reality is our industry is in one of the most protracted down cycles in decades, facing the third consecutive year of below 3% GDP growth,” said Dow CEO Jim Fitterling. He made his comments during an earnings conference call. “This has been further exacerbated by geopolitical and macroeconomic concerns, which are weighing on demand globally.”

Dow highlighted tariffs, which will delay when the chemical industry returns to mid-cycle earnings, said Jeff Tate, Dow chief financial officer. Those tariffs could change trade flows, and could squeeze Dow’s margins.

Tighter margins could partially offset the benefits from demand, which Dow still expects will rise.

TARIFFS DELAYING PURCHASES, STIFLING DEMAND
The tariffs have caused customers and consumers to delay purchases, Fitterling said.

“We’re just in an environment right now where in the marketplace, if you look at downstream demand, it doesn’t matter if it’s a consumer or one of our customers or somebody in the B2B world, they’re all just kind of taking a wait and see approach. And that has that has an impact on what we think the long term,” he said. “Right now, all this activity on tariffs is just stifling the demand.”

HIGH US MORTGAGE RATES DELAYING HOUSING RECOVERY
Elevated interest rates for home loans have made housing less affordable for consumers. As a result, home sales have remained depressed, and has dragged down demand for paints, coatings, polyurethanes and other chemical products used in house construction.

The slump in house sales is also lowering demand for appliances, furniture and other durable goods because consumers tend to buy these when they move. Fewer home sales mean fewer moves.

Tate noted that March marked the 14th consecutive month of year-on-year declines in building permits.

SLOWER GROWTH IN AUTO DEMAND
Growth in automobile demand and the transition to electric vehicles (EVs) are slowing, said Karen Carter, Dow chief operating officer.

The spike that took place in the US in March was the result of consumers making purchases before tariffs kicked in.

China is relying on incentives to prop up its market.

In the EU, February new car registrations fell by their largest amount since September 2024.

PHARMACEUTICALS, DATA CENTERS REMAIN BRIGHT SPOTS
Dow continues to see pockets of growth in pharmaceuticals and data centers. Electronics and personal care applications have proven to be resilient end market for the company’s Performance Materials & Coatings segment.

Q2 OUTLOOK
The following table summarizes Dow’s Q2 outlook.

(Thumbnail shows polyethylene, a product made by Dow. Image by ICIS.)