Issue Date: March 25, 2013 | Web Date: March 21, 2013
Dow Plans More U.S. Investment
Dow Chemical will construct several Gulf Coast chemical plants and supply raw materials to a major U.S. facility planned by a Japanese joint venture. Together, the projects demonstrate how U.S. investment in chemical manufacturing based on low-cost natural gas from shale is going beyond basic commodities to include high-value derivatives.
As several other large chemical producers have done, Dow already announced plans to build an ethylene cracker on the Gulf Coast. Now, the largest U.S. chemical maker says it will add several downstream polymer facilities at yet-to-be-determined locations.
Among the new Dow projects are a low-density polyethylene plant serving packaging and telecommunication markets, an “enhanced” polyethylene facility making polymers for packaging and medical applications, and a facility producing elastomers for hot-melt adhesives. Dow also restated previous plans to build an ethylene-propylene elastomer plant.
The new polymer facilities will require up to 3,000 workers at the peak of construction, Dow says. All of its Gulf Coast projects will employ 5,000 workers during peak construction and support more than 35,000 jobs in the broader U.S. economy, the company claims.
Dow’s building boom is a radical shift from just a few years ago, when it was scaling back its U.S. manufacturing presence and concentrating investment abroad. “Trends in U.S. shale gas have led us to make different decisions about where and how we invest for global growth,” says CEO Andrew N. Liveris.
Dow’s Japanese partners, Idemitsu Kosan and Mitsui & Co., also see new opportunity in the U.S. They plan to build a 330,000-metric-ton-per-year linear α-olefins facility on the Gulf Coast by 2016. The plant will consume ethylene from Dow’s production grid and supply comonomers for Dow polymers.
After the flurry of ethylene cracker announcements, such derivatives facilities are a necessary second wave of shale-gas-related investments, according to Mark Eramo, vice president for chemical market insights at the consulting firm IHS Chemical. Given the U.S. market’s limited capacity to absorb all of the new capacity, Eramo expects that much of it will be exported to Latin America and Asia.
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