Dow bullish about petrochemicals outlook - C&EN Global Enterprise

Oct 2, 1989 - First Page Image. It's no secret that Dow Chemical has been making some changes in its business portfolio—beefing up its stake in the ...
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ACS Science Dow bullish about petrochemicals outlook It's no secret that Dow Chemical has been making some changes in its business portfolio—beefing up its stake in the consumer products and specialties areas. But at the same time, the company isn't neglecting the petrochemicals businesses that make up its core. Dow remains "strongly committed" to petrochemicals, says Bill Waycaster, vice president and general manager of hydrocarbons and energy at Dow in Houston. Indeed, Waycaster's department is currently orchestrating several big projects—a 1.5 billion lb-per-year ethylene plant at Freeport, Tex., to be built by late 1992; a 1.1 billion lb-per-year unit to be built at Fort Saskatchewan, Alberta, Canada, by late 1993; and a 1 billion lb-per-year styrene plant to be built either at Plaquemine, La., or Freeport "in the 1993 time frame." And from his perspective, it's a good time to be in the petrochemicals business, relative to years past. "I think the industry is working hard not to make the same mistakes it has made in the past," he says. For example, although some observers predict that new ethylene capacity—being planned by Dow and several other companies—will summon the overcapacity problems and weak prices reminiscent of the late 1970s, Waycaster sees that scenario as unlikely. "Over the past 18 months, there has been a lot of talk about all these ethylene projects and whether they will go. But I don't hear a lot of people highlighting the fact that companies are peeling away from the pack and opting not to add capacity." He p o i n t s out that Q u a n t u m Chemical and Phillips 66 have already begun construction and speculates that "there's a good chance these two plants will be completed. Dow will happen. So, we are looking at three ethylene plants being added [in the U.S.] between 1991 and late 1992. Beyond that, it's hard to speculate. I think the likelihood of overcapacity is diminishing." The industry might also consider retiring some of its older ethylene plants as a means to fine-tune the supply picture. Indeed, companies

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Waycaster: industry is more flexible like Dow—which has at least one unit that is more than 25 years old— may decide to shut down aging capacity rather than nix plans for new units. He acknowledges that "there is a fair amount of difference" between the newest generation of plants and the older plants. "The question is: Will the market get bad enough where the guy with the older, inefficient plant will feel uncomfortable enough to shut it down. He may be making a much smaller margin, but he may still be turning a profit." "A producer's ability to use an economical feedstock will have a lot to do with whether or not they run existing capacity," he contends. "As we finish the '80s, producers are faced with limited quantities of gas-liquid-type feedstocks and more companies are turning to fuel-oilbased feedstocks. There's still a fair amount of ethane-based ethylene capacity in the U.S. and ethane is likely to be a very expensive feedstock in the future." Still, Waycaster notes that the industry has become better at handling feedstock shortages. For instance, there have been more imports of feedstocks to supplement the U.S. supply. "The whole industry has learned to be more flexible and to better balance itself." Susan Ainsworth

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October 2, 1989 C&EN

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