Dow unveils $4bn of new capacity investment to 2022

11 May 2017 16:17 Source:ICIS News


LONDON (ICIS)--Dow is to invest in an expansion to its recently completed Texas cracker and develop flagship new polyethylene and polyolefin capacities in the US and Europe as part of a five-year investment campaign, the US-headquartered chemicals firm said on Thursday.

The raft of new growth capital expenditure is expected to cost around $4bn, with the bulk of investments intended to capitalise on the competitive advantage offered by the proliferation of cheap US feedstocks, according to Dow CEO Andrew Liveris.

Dow is to ramp up capacity at its new TX-9 ethylene cracker in Freeport, Texas, to 2m tonnes/year, making it the largest unit in the world. The company completed construction of the unit in late March this year with a nameplate capacity of 1.5m tonnes/year.

The company is also planning construction of a 600,000 tonne/year polyethylene (PE) unit on the US Gulf Coast, and a 450,000 tonne/year polyolefins facility in Europe.

A series of investments to strengthen its polyurethanes value chain is also planned, with an eye to increasing specialty polyols growth, as well as a series of debottlenecking projects across its asset base to free up an additional 350,000 tonnes/year of PE capacity.

The majority of additional PE capacity will be in North America, Dow added.

The company is to license technology developed by subsidiary Univation to develop a new catalyst unit, as well exploring additional investments to enhance feedstock flexibility in the US, the company added.

The new units are expected to begin coming on stream in 2020, and bring Dow’s US growth investments to $12bn over a 10-year period.

“Manufacturing plays a vital role in driving economic growth and prosperity across virtually all sectors of society,” Liveris said.

“The positive investment environment in the US chemical and materials sector, driven by competitive feedstocks and a skilled workforce, is a driver for Dow to further invest in the US,” he added.

Dow’s Midland, US, headquarters also stand to benefit from an additional $500m investment to allow greater synergies from the integration of subsidiary Dow Corning's manufacturing operations with those of its parent, and the development of a new innovation centre in the city.

Liveris had hinted at additional investments late last month at an investor day, stating that the company may pursue some incremental investments following major projects like the construction of the TX-9 cracker.

The company may also be eyeing opportunities to drive the growth of performance chemicals at US neighbour DuPont once the anticipated merger closes later this year, according to CFO Jim Fitterling.

“As soon as we can close on the Dow/DuPont deal, we’ll want to bring them in on that discussion and understand how we can bolt on some growth capacity for DuPont performance materials,” Fitterling said in April.

Image: Dow's plant in Freeport, Texas, uses ethane to make ethylene, which is the feedstock for polyethylene (PE). (Dow Chemical)

By Tom Brown