Q3 2026 Earnings Calls: Dow Says Closures Will Lead to Petchem Recovery

On Dow’s Q3 earnings call, management tied a petrochemical market recovery more to capacity closures than to demand growth. CEO Karen Carter estimated global ethylene “operating rates today are in the low 80s.” She said the industry needs “about 10% of capacity to come out” to return to what Dow calls mid-cycle rates, meaning the levels seen in a relatively normal market. Closures covering 5%-6% of global capacity have already been announced, including Dow’s own Böhlen, Germany cracker, slated to shut down in Q4 2027. Closures covering another 8% are being speculated, mostly in high-cost regions of Europe and Asia. “You’re seeing the rationalizations,” Carter said, adding that Dow believes “we could get back to mid-cycle rates by the end of the decade.”

Management noted U.S. ethane prices are on the rise, citing growing exports, new Gulf Coast cracker capacity from Golden Triangle and international crackers “leaning more heavily on ethane” while oil prices stay elevated. Carter noted that global polyethylene prices are set by producers using naphtha, an oil-based feedstock, so elevated oil prices widen the margin for ethane feedstock crackers. That makes ethane, in her words, “the lowest-cost feedstock in the world,” though she added, “It’s an advantage for now.” U.S. Gulf Coast (USGC) petchem margins for ethane have remained strong recently, as margins for heavier feedstocks have dropped in the past few months (see chart below). Carter said Gulf Coast rates “remain above 90%,” with no export logistics constraints. Dow has proposed polyethylene price increases of 7 c/lb for October and 5 c/lb for November, and management believes “the current market dynamics will support us achieving those."