The Urethane Blog

Urethane Highlights From Dow Call


On slide 11, Performance Materials & Chemicals increased volumes in most businesses. Polyurethanes delivered a double-digit volume increase on demand for system house applications and specialty polyols as the business continued to shift its mix into higher-value offerings. Industrial Solutions reported a volume decline, despite strength in the durables markets on weaker de-icer demand due to a milder winter. We also saw a notable decline in our equity earnings in the segment consistent with our modeling guidance from the ramp up of Sadara spending, the change in ownership of MEGlobal, and lower MEG prices.


When you look at Performance Materials & Chemicals, I'd say that delta is 50/50. And if you look at polyurethanes in Performance Materials & Chemicals, they're carrying the burden this year of the higher start-up cost of Sadara. So you have to, on a run-rate basis, you have to think about where they will be next year. And they've also got some commodity price pressures in some parts of the chain, mostly in isocyanates right now.


Aleksey Yefremov – Nomura Securities International, Inc.

If you look at Sadara, do you expect sequential improvement in equity contribution within Plastics as polyethylene units start up? And is it fair to say that most of your year-over-year headwind in equity earnings is concentrated in Materials and Chemicals?


Andrew N. Liveris – Chairman, President & Chief Executive Officer

Jim, take the first slice of that.

James R. Fitterling – Vice Chairman & Chief Operating Officer

Yeah. So right now the commissioning is going well and we're underway with the mixed-feed cracker. The key point will be when that mixed-feed cracker starts up. So once we get the mixed-feed cracker running and we can communicate to you that it's up and running, we've got those two polyethylene plants proven. At that point, you should start to see some of that show up into the Performance Plastics business. Obviously, the start-up costs on Performance Materials and Chemicals, primarily in the polyurethanes business, are going to continue through the year because those units don't start up until later in the year. So it's kind of a mixed bag there. And I would expect you won't see most of it until probably second half.

Howard I. Ungerleider – Vice Chairman & Chief Financial Officer

Yeah. And not much to add. I mean, we gave the down $50 million to $100 million headwind year-on-year for the second quarter if you look at it versus same quarter a year ago. And clearly the tailwind, it will come in Plastics in the back half of the year to Jim's point. But PMC is going to be a headwind for us all year. They're in the big part of the build from a unit op standpoint in Performance Materials and Chemicals.