MOSCOW (MRC) -- Chemicals maker Dow Inc reported better-than-expected quarterly profit and revenue on Wednesday, helped by higher volumes in Asia as well as cost cuts, and pointed to a recovery in demand this year on the back of easing trade tensions, said Reuters.
Dow has been cutting costs to offset a drop in demand for chemicals used in plastics, building materials and paints, amid a global slowdown. The company said it had reduced costs by USD35 million in the quarter and would make further cuts this year.
An oversupplied market and uncertainties stemming from a prolonged U.S.-China trade war have also hit prices for polyethylene, the main ingredient used in making most plastics. The company’s overall prices declined 12% in the quarter.
Volumes fell 2%, primarily due to weakness in its hydrocarbon and energy unit, which sells by-products of oil refining. The drop was largely due to planned maintenance activity in Europe. Sales fell across all its three businesses, with its biggest unit that makes chemicals used in packaging and specialty plastics posting an 18% drop.
However, Dow’s results were boosted by double-digit growth in China. Leading into the Chinese New Year, Dow saw strong demand, with many customers either maintaining or buying additional inventory, Ungerleider said.
Commenting on the coronavirus outbreak, Ungerleider said it was “too soon to tell” the impact, but added it may be a positive for Dow’s business as it supplies to the medical and health sectors.
Dow, spun off in April after chemical conglomerate DowDuPont split into three, posted operating earnings of 78 cents per share, excluding certain items.
As MRC informed earlier, Dow Chemical, the world's petrochemical major, has put order controls in place for vinyl acetate monomer (VAM). The letter dated January 8 said, effective immediately, volumes will be based on previous monthly averages of purchased volumes, or limited to monthly maximum volumes specified in contracts. The letter does not provide details about how long the order control will be in place.
VAM is the main feedstock for the production of ethylene-vinyl-acetate (EVA).
According to MRC's DataScope report, November EVA imports to Russia dropped by 8,9% year on year to 3,440 tonnes from 3,780 tonnes in November 2018, and overall imports of this grade of ethylene copolymer into the Russian Federation decreased in January-November 2019 by 18,9% year on year to 35,95 tonnes (44,330 tonnes in the first eleven months of 2018).
The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. Dow is a large producer of plastics, including polystyrene (PS), polyurethane, polyethylene, polypropylene, and synthetic rubber.