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Dow Cuts Polyethylene Operating Rates 15% Amid Global Logistics Constraints

Dow Inc. has temporarily reduced polyethylene operating rates by 15% of global nameplate capacity, the company said Wednesday in a letter to customers.

The company cited continued global logistics constraints, including port and rail congestion in the U.S. Gulf Coast and “dynamic conditions” in Europe as reasons for the reduction.

“The duration of these measures will be determined as market dynamics in Europe and pressure on constrained logistics normalize. We also expect these actions to help balance elevated inventories in warehouses and at key ports around the world and its logistics resiliency, particularly in the USGC ahead of the most active part of the annual hurricane season in the U.S.,” the letter said.

A U.S. polyolefins trader this week said while shipping from Houston has improved slightly, they are still only able to ship half of what they need to.

“Warehouse space in Houston is tight,” the trader added.

“In Europe, Africa and South America, things are not moving,” another trader said. “Even if you get orders, shipping is not easy.”

Aggregate polyethylene operating rates in the U.S. and Canada were in the mid-80s in July, according to preliminary data from the American Chemistry Council.

No other U.S. suppliers have officially communicated polyethylene operating rate cuts, according to market participants, but there are indications that some are looking to move plant turnarounds forward on the calendar.

Reporting by David Barry, dbarry@opisnet.com; Editing by Adam Burkin, aburkin@opisnet.com and Jeff Barber, jbarber@opisnet.com

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