Dow Chemical's European Sales Down 15%; Plans to Close Texas PO Facility and Implement 20 Asset Actions to Cut Costs

Dow Inc. announced today that it is conducting a strategic review of its assets in Europe, which account for about 20 percent of sales in the region. The evaluation focused on the polyurethane business. In addition, Dow Chemical plans to close its propylene oxide (PO) plant in Freeport, Texas in 2025 as part of its global polyol capacity rationalization plan. Dow Chemical announced the moves in conjunction with its third-quarter results. According to the company's earnings report, sales and operating income increased slightly in the third quarter.

"Given the current market dynamics in Europe, including the lack of demand recovery and the need for clear, consistent and competitive regulatory policies, we have determined that this strategic move in Europe is necessary," said Jim Fitterling, Dow's chairman and chief executive Officer. In its published report, Dow noted that as of 2024, sales in the Europe, Middle East, Africa and India (EMEAI) region were more than 15 percent below 2021 levels.

The company said it would consider "all value-creating options" when reviewing its European assets. In 2023, Dow's sales in the EMEAI region reached $14.5 billion, meaning the business had annual revenue of about $3 billion. Dow Chemical expects to complete the asset review in mid-2025.

"Over the past few years, we have demonstrated our commitment to operating with the best owner mindset by being proactive in selecting high-cost assets and working with changing market dynamics," Fitterling said.

The Freeport PO unit accounts for 20 percent of North American industrial capacity, and closing the unit will help reduce Dow's exposure to low-value commercial markets. According to S&P Global Commodity Insights, Dow's PO capacity in Freeport is 550,000 tons per year. The company also manufactures PO products in Plaquemine, Louisiana. Other U.S. producers include LyondellBasell and Indorama. Lyondellbasell is another joint venture between LyondellBasell and Covestro.

Dow Chemical Chief Financial Officer Jeff Tate said global PO supply has grown 50 percent in the past four years. "There's an oversupply and lower operating rates," Tate said. "That puts pressure on margins." While Dow Chemical did not provide specific details, the company said it has taken more than 20 "asset actions" since 2023, including targeted rationalization of global polyol capacity and asset closures in coatings. Most of the action to date has been in Europe and the industrial intermediates and infrastructure business, which includes polyurethanes.