* Looks to tap cheaper shale gas in North America
* Expects plants to employ up to 3,000 workers at
March 18 Dow Chemical Co said it plans
to build several plants on the U.S. Gulf Coast to take advantage
of cheap shale-derived natural gas to produce plastics used in
areas such as transportation and telecommunications.
The U.S. plastics-producing industry is increasingly
shifting away from oil-derived naphtha, the key feedstock for
the petrochemical industry. It is also investing billions in
plants that run on ethane, made from shale gas.
Over the past few years, Dow has changed its focus from
low-margin commodity chemicals to high-margin specialty
materials. The biggest U.S. chemical maker said last week
that it planned to raise $1.5 billion from asset sales over the
next 18 months to focus on high-margin businesses.
Margins in Dow's performance plastics business, which
accounts for a quarter of total sales, have improved in North
America as the company uses cheap natural gas to make some
plastics in the region.
In contrast, margins have been squeezed in Europe and Asia
where it uses more-expensive crude oil-derived naphtha.
Dow said on Monday that the plants will employ up to 3,000
workers at construction peak, but did not specify how much it
intends to invest.
"These moves directly support Dow's transformational
strategy to create additional competitive advantage for Dow's
performance businesses by expanding access to advantaged natural
gas-based feedstocks," the company said in a statement.
The facilities will manufacture materials for several of
Dow's fastest growing market segments, including packaging,
hygiene and medical, electrical and telecommunications,
transportation, sports and leisure and consumer durables.
Dow, which is exploring specific location options on the
U.S. Gulf Coast, said the new units will cater to markets in
North and South America.
A glut of natural gas liquids like ethane in North America
has led to a handful of announcements about new plants that
convert ethane into ethylene, a building block for many
Dow, a proponent for a go-slow policy on natural gas
exports, warned that shipping the fuel abroad would mean fewer
domestic factory jobs.
Using ethylene in specialty products will help the company
beat downturns in the commodity chemical cycle. The company's
ethylene production plant on the U.S. Gulf Coast is expected to
go online in 2017.
Dow also said it had reached an initial agreement to provide
ethylene to a petrochemical plant on the U.S. Gulf Coast, being
developed by Japanese oil refiner Idemitsu Kosan and
trading house Mitsui & Co.
Dow spokeswoman Nancy Lamb declined to disclose the cost of
the new plants or the terms of the ethylene supply deal for the
Idemitsu Kosan-Mitsui joint venture.
Dow shares were down about 1 percent at $33.41 on Monday on
the New York Stock Exchange.