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Dow Expects Global Polyethylene Demand to Stay Strong in 2022 Following Record Net Sales
January 27, 2022

Coming off of a strong record year for 2021, Dow said during its Q4 quarterly earnings call that it expects global Polyethylene demand to remain strong well into 2022 as new capacity comes online.

"For every 1% of GDP growth in the marketplace, you need 2 to 3 world-scale Polyethylene plants to come on line and our expectation is that is not going to change," said Dow CEO Jim Fitterling. "We see strong demand across all the sectors for plastics products. And so, that's what's driving it."

Fitterling added that that the market growth is going to help moderate some roughly 4 million tons of North American capacity that is come online this year, impacting the market by midyear, with about half of that destined for the export market.

The Dow CEO's comments come as the company completed 2021 with net sales at $14.4 billion, showing year-over-year sales growth of 34%, with gains in every operating segment, business and region. Sequentially, net sales were down 3% primarily driven by decreased Polyethylene volume due to supply constraints as well as lower olefin and co-product prices.

While volume declined 4% year-over-year due to supply constraints from several factors, including its own maintenance, lingering effects of weather-related outages and global logistics challenges, Dow said it continues to see robust underlying demand across its end markets, particularly for higher-margin downstream and sustainability-led applications and margin expansion in every operating segment.

For 2022, Fitterling said Dow expects continued demand strength across their end markets, supported by growing industrial production and sustained consumer spending.

Dow's CEO also noted this company's expectations on operating rates are 2 to 3 percentage points higher than what the industry is expecting on polyethylene, and plastics is typically running a bit heavier than that.

"We are working hard to normalize operating rates, inventory and service levels following a year of supply constraints and Covid-related logistics challenges, Fitterling said. "While the global economy continues to be impacted by supply chain pressures, these logistics constraints are expected to ease throughout the year to fulfill elevated order backlogs and pent-up customer demand."

Dow's CEO noted that as the company navigates near-term dynamics, it will continue to be disciplined in the implementation of its strategy and progress on our higher-return, lower-risk growth projects and efficiency programs.

By Brian Balboa for The Plastics Exchange.

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