We have referenced this chart in the past and it bear looking at again. It is from Dow Chemical’s (DOW) earnings presentation today
Why does what Dow does matter? As we have said many times, Dow is at the ground floor of what happens globally. From their Ag division, to the basic and specialty chemicals divisions and the rest of them, what is happening globally (roughly 80% of profits are from international operations), is depicted by their results. Dow’s basic chemicals division produces the building blocks for thousands (millions?) of products globally. Increased global demand will show up here first.
Ignoring the pure profit and loss, what we want to focus on is their operating rates. It goes to pure global supply/demand.
Remember back in Q4 2008 they hit 64%, a level not seen since the great depression (December 2008 was 40%)? That was when the global economy was going into “shut down” mode Since then we have seen three consecutive quarters in operating levels which is good news globally.
Important note: This does not mean the US economy is growing robustly. Please see the following slide.
