Dow May Split Plastics Business

Dow Chemical's transformation into a company more focused on value-added specialty chemicals than on commodities doesn't necessarily spell the end of its plastics business.

At a press conference in Midland, Mich., Dow Chemical CEO Andrew N. Liveris discussed the firm's plastics operations, which have faced an uncertain future since the proposed K-Dow joint venture with Petrochemical Industries Co. of Kuwait was scuttled by that country's government in December 2008. The venture was to include Dow's polyethylene, polypropylene, and polycarbonate businesses.

At the press conference, Liveris said Dow initially looked for another partner to take PIC's place. But given polyethylene capacity shutdowns, cost-cutting initiatives, and the sale of its polycarbonate business to Bain Capital earlier this year, Dow is now mulling a different plastics strategy. "The plastics portfolio is just not available in the same form it was when the [K-Dow] deal was struck," he said.

Liveris told reporters he is considering keeping the linear low-density polyethylene (LLDPE) business and finding a partner for or divesting polypropylene and high-density polyethylene (HDPE). Compared with other polyolefins, LLDPE goes into higher-value markets, such as packaging, Liveris explained. He also indicated Dow would likely strike no "big-bang" deal but rather "selective deals."

When pressed by C&EN on the viability of such a move, Liveris pointed out that polypropylene and HDPE mostly came with Dow's 2001 purchase of Union Carbide. Before then, the company focused on LLDPE. David Begleiter, a chemical stock analyst with Deutsche Bank, estimates that a 50% stake in Dow's HDPE and polypropylene businesses would be worth between $2 billion and $3 billion.