Resumption of 680,000-ton olefins plant and implementation of 605 layoffs; Dow undertakes major reshuffle of global capacity

On the unit side, on June 9, Dow's LCH3 steam cracker at the Terneuzen site in the Netherlands officially resumed production. The unit had been shut down to a long time since early 2025 due to sluggish downstream chemical demand in Europe, and the annual maintenance plan was also postponed. The unit is designed to create 680,000 tons of ethylene and 286,000 tons of propylene annually, with a total olefin capacity of 966,000 tons, making it a key overseas olefin supply capacity to Dow. With the restart of the unit, the supply of ethylene and propylene in the European market will further increase. Coupled with currently high regional olefin inventories and weak downstream sector operating rates, this restart is highly likely to put downward pressure on regional European olefin feedstock prices.

In terms of operational cost reduction, Dow disclosed a extensive workforce optimization plan to the Netherlands region in June, planning to lay off 605 people across its three major production bases in the region. This initiative is part of the "convert to Win" global cost reduction and efficiency enhancement plan launched by the Group at the beginning of the year. According to the overall plan, Dow intends to lay off 4,500 people globally, targeting an additional $2 billion in annual operating profit to reverse the pressure of continuous corporate losses. The company reported a net loss of over $2.4 billion to the full year of 2025 and a loss of $445 million in the first quarter of 2026. The Terneuzen site in the Netherlands is Dow's largest production base outside the United States, covering multiple core manufacturing chains such as olefins, MDI, and high-end packaging plastics. This layoff aims to phase out high-cost aging businesses in Europe and accelerate the tilt of capacity layout towards China and the Asia-Pacific region.

In terms of capacity investment, Dow has simultaneously initiated a two-way layout of regional capacity shrinkage and high-end capacity expansion. On June 25, the company announced a special silicone expansion plan with a total investment of approximately $100 million. The projects will be located in the United States, China, and Japan, focusing on the R&D and mass production of high-end silicone items in AI thermal regulation, semiconductors, and new energy fields, to consolidate its sector competitiveness in the high-end silicone materials sector. Among them, the Zhangjiagang silicone polymer expansion project is steadily progressing, relying on the huge domestic downstream market to digest the new capacity and make up to the revenue gap caused by the contraction of European business.

At the same time, backward silicone capacity in Europe is accelerating its exit. Dow has clarified that the 145,000 tons/year polysiloxane unit at its Barry, UK site plans to initiate the shutdown process in mid-2026. This capacity ranks among the second largest upstream silicone units in Europe. Its shutdown will immediately minimize Europe's efficiently silicone supply by nearly 30.5%, bringing marginal improvement to the regional supply-demand pattern and creating favorable conditions to domestic silicone companies to export to the European market.

Overall, Dow is currently accelerating the reshaping of its global capacity structure: in the European market, it aims to minimize costs primarily through unit optimization, workforce streamlining, and the shutdown of backward capacity; it relies on the dividends from the new energy and electronics industries in the Asia-Pacific to increase investment in high-end new materials; and it improves profitability levels through regional layout adjustments to consolidate its market position in the global fine chemical and new materials sectors.