Strategising: Dow to shut Texas PO facility and assess European PU assets; Eni to close two ethylene crackers in Italy

While China is expanding its polyurethane capacities, Europe and the US are seeing a slowing climate. US material firm Dow recently announced that it is conducting a strategic review of European assets and intends to shut down a propylene oxide (PO) unit at Freeport, Texas, in 2025, which has a capacity of 550,000 tonnes/year, or about 20% of the industry's capacity in North America..

These assets account for about 20% of Dow's total European sales, mainly in the polyurethanes segment. The PO plant closure in 2025 is as part of its efforts to rationalise global polyol production capacity. Dow has already reported third-quarter results, with sales and operating income both up slightly.

"This strategic review is necessary in Europe given the current market dynamics in the region, including a lack of demand recovery and a lack of clear, consistent and competitive regulatory policies," said Jim Fitterling, Dow's Chairman/CEO. Dow noted in a report that as of 2024, sales in the Europe, Middle East, Africa and India (EMEAI) region were more than 15% below 2021 levels.

Dow said it would consider "all value-creating options" as it reviewed its European assets. In 2023, Dow's sales in the EMEAI region reached US$14.5 billion, while the assessed assets had annual revenues of approximately US$3 billion. Dow expects to complete the strategic review by mid-2025.

Fitterling further stated, "Over the past several years, we have demonstrated our commitment to operating with the best owner mindset by taking aggressive actions to select high-cost assets that are in line with changing market dynamics."

Dow also manufactures propylene oxide in Plaquemine, Louisiana. Other US producers include LyondellBasell and a joint venture between LyondellBasell, Covestro and Indorama.

Jeff Tate, Dow's chief financial officer, said the global supply of propylene oxide has grown 50% over the past four years.

"The market is oversupplied at the moment and operating rates are low, which puts pressure on margins."

While Dow did not provide specific details, it said it has taken more than 20 "asset actions" since 2023, including targeted rationalisation of global polyol capacity and closure of coatings assets. Most of the action to date has been in Europe and in the industrial intermediates and infrastructure businesses, including polyurethanes.

Meanwhile, in Italy, energy firm Eni plans to shutter two ethylene crackers, in Brindisi and Priolo Gargallo, as part of an overhaul of its struggling Versalis chemical business.

With the move, the Italian firm joins a growing list of companies closing European olefin and polyolefin facilities that are older, are smaller, and have higher operating costs than newer facilities built in the US, China, and the Middle East.

Other materials firms, ExxonMobil and Sabic, both announced similar closures earlier this year while LyondellBasell Industries is reviewing its European capacities.

The business has lost US$3.2 billion over the past 5 years and US$7.6 billion over the past 15, Eni says.

The site in Brindisi, on Italy’s Adriatic coast, was established in the 1960s to make olefins and chlor-alkali. The cracker in Priolo Gargallo, in Sicily, is on a site that has been making chemicals since the 1950s. The Brindisi cracker has 440,000 tonnes/year of ethylene capacity; Priolo has 530,000 tonnes/year.

Meanwhile, the company is investing US$2.2 billion to import raw materials to continue polymer production in Brindisi. It will also build a factory there to make stationary batteries. In Priolo, Eni is considering a plastics pyrolysis plant and a biorefinery to make sustainable aviation fuel.

In addition to the cracker shutdowns, Eni will close a 380,000 tonnes/year polyethylene plant in Ragusa, Sicily, and plans to sell some or all of its ethylene cracker in Dunkerque, France. The firm had announced plans to convert the Dunkerque cracker from naphtha feedstock to lower-cost ethane imported from the US but didn’t follow through.

According to analysts, and with Ineos building a 1.5 million tonnes/year cracker in Belgium, with the recent announcements of plant closures, as well as ones under study, some 2.5 million tonnes of ethylene capacity is likely to shut down in Europe.

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