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Chemists are no strangers to having things blow up in their faces, but December was as bad a month as the industry has had in memory. This was underscored by Dow Chemical, the largest US manufacturer, which fell far short of already low expectations for fourth quarter revenue. Chief executive Andrew Liveris said the month “basically disappeared” for Dow as volumes skidded by 17 per cent for the quarter compared with a year earlier. The news was particularly bleak for its basic plastics and basic chemicals segments that saw revenue slip 38 and 40 per cent during the quarter, respectively. Dow shut down 22 of 53 polyethylene trains worldwide in December.

It is not unusual for petrochemical producers to swing from feast to famine and back again as customers run down inventories and then engage in furious restocking. So far though, both Dow and rival BASF have indicated that January saw no meaningful recovery. A key competitor, LyondellBasell, put several subsidiaries under bankruptcy protection last month and Kuwait’s state petrochemical group reneged on a deal to inject cash into a commodity joint venture with Dow.

An environment of such overcapacity and uncertainty hardly sounds like a good one to be flogging petrochemical assets, but that is what Dow says it may do to raise cash for its now overdue commitment to buy Rohm & Haas. Dow claims to have a dozen interested parties, both financial and industry companies. With all of Dow Chemical now worth a little over $10bn, a bit more than Kuwait was to pay for half Dow’s commodity business, how much can it reasonably expect for its petrochemical assets in the depth of a historic industry slump and credit crunch?

Mr Liveris now admits that cutting the dividend and issuing equity are among his options for avoiding a “fire sale”. Barring clear signs of an industry rebound and thawing of credit markets, they now look like his least bad choices.

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