Lower prices weigh on Dow’s 4Q23 polyurethanes sales
US firm Dow said its polyurethanes and construction chemicals business delivered lower sales revenue in the fourth quarter 2023 compared with a year earlier, driven by a fall in prices.
Sales from the company's industrial intermediates and infrastructure segment, which includes Dow's polyurethanes business, dropped by 2pc on the year to $2.9bn in October-December 2023. Full-year sales from the segment were down by 9pc compared to 2022 at $12.5bn.
For polyurethanes and construction chemicals, prices were lower in all regions in the fourth quarter. "We continue to monitor China, where we see improving conditions, which could provide a source of demand recovery following the lunar new year," Dow's chief financial officer Jeff Tate said. But in Europe, "while inflation has moderated, consumer demand remains weak", Tate said.
A seasonal increase in demand from the de-icing sector was more than offset by lower volumes sold into the building and construction sector in the fourth quarter, Dow said. Looking forward, "increased seasonal demand for de-icing fluid is expected to provide a $25mn tailwind despite being partly offset by continued weakness in consumer durables demand", Tate said. In addition, "we expect margin expansion on higher MDI and MEG spreads as well as lower European energy costs," he added.
Dow also anticipates higher seasonal demand in the building and construction end-markets to support financial results this quarter. The construction industry is most active in the summer, and demand for chemicals such as MDI, which are used in construction materials such as insulation boards, typically starts to increase towards the end of the first quarter.
Global overcapacity in the propylene oxide (PO) market remains a challenge, said Dow's chief executive Jim Fitterling.
In "polyurethanes and propylene oxide […] we've seen capacity come on in China. We've got to see the durable goods market and the housing market come back to tighten up PO," he said. "We're watching carefully on construction chemicals demand and durable goods to see if we see an uptick there. We saw some good movement in consumer electronics and that's got me a bit optimistic," Fitterling said.
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