Dow to further cut PE production

Dow Chemical has announced it will immediately begin the process of idling approximately 885 million lb. of polyethylene manufacturing capacity in North America. The production cut-back is in response to increased feedstock costs and on-going weak demand, the company said in a release. This cut-back, coupled with previous capacity idling of 600 million lb. since mid-2001, brings the total idled PE manufacturing at Dow and its Union Carbide subsidiary to more than 1.4 billion lb. in North America
"We are taking action on things that are not in our control," said Romeo Kreinberg, president, polyolefins and elastomers group at Dow. "We have realized some significant margin erosion in recent months, due in large part to natural gas prices that remain at double historical levels. With the winter heating season fast approaching, and the nation’s gas reserves far below where they should be at this time in the calendar year, we’re preparing for another period of volatility in gas prices during the remaining months of 2003 and into 2004."
The cut-backs will be made at unspecified units. Dow said the reductions will not affect customer supply.