(Plastemart) -- Dow, the world's second-biggest chemical maker, said it's ⌠bullish on the outlook for plastics because of rising demand for packaging and wire coatings and falling energy costs at its US plants.
The profit margin for Dow's plastics business will stay near this year's level in 2011 before rising further, as per Chief Executive Officer Andrew Liveris. New ethylene and polyethylene plants in the Middle East and Asia haven't started as quickly as predicted by some industry consultants and delays will continue, Liveris said.
Even if excess capacity does materialize, older plants in Europe and Asia will shut, keeping supply tight. Liveris, who tried unsuccessfully to sell a 50% stake in Dow's basic-plastics unit in 2008, said he's no longer considering such a deal. The plastics business has led earnings growth this year after Dow closed older plants while lower natural-gas prices made U.S. plants more competitive.
Dow plans to retain more than half the basic-plastics unit, the business that makes linear low density polyethylene, or LLDPE, because Dow technology and end markets in packaging and coatings for wire and cable make it highly profitable. Dow will consider selling its stake in its Equate venture with Kuwait after completing an arbitration proceeding next year over Kuwait's cancellation of the so-called K-Dow plastics venture.