Dow Chemical Co., the world’s second-biggest chemical company, plans to use more ethane to make plastics and may form a venture to separate it from natural gas because of low U.S. prices.
Dow plans to increase cracking of ethane by 20 percent to 30 percent at ethylene plants on the U.S. Gulf Coast over the next two to three years, Midland, Michigan-based Dow said today in a statement. That will increase Dow’s global use of ethane for making ethylene to as much as 65 percent, from about 55 percent, said Rebecca Bentley, a spokeswoman. Costs haven’t been determined, she said.
Chief Executive Officer Andrew Liveris, who tried unsuccessfully to sell a 50 percent stake in Dow’s basic-plastics unit in 2008, has said he is no longer planning such a deal. The plastics business has led earnings growth this year after lower natural-gas prices made U.S. production cheaper than oil-based resins made in Europe and Asia.
“Ethane is an advantaged feedstock in the United States and we anticipate a favorable oil to gas ratio to continue,” Raja Zeidan, global business vice president for Dow Hydrocarbons, said in the statement.
Dow, the world’s largest producer of ethylene and polyethylene plastics, said it is reviewing joint-venture options to build a natural-gas liquids fractionator, a plant that separates the components of natural gas, to secure supplies of ethane.
Dow rose 82 cents, or 2.5 percent, to $33.24 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 20 percent this year.
BASF SE is the world’s largest chemical maker, based on sales last year.