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Dow Chemical Expands Propionic Acid Facility in Texas


Dec. 19 2017, Updated 10:55 a.m. ET

Dow expands Propionic acid facility

On December 11, 2017, DowDuPont’s (DWDP) subsidiary Dow Chemical announced that it would expand its propionic acid facility in Texas. The facility is expected to be completed in 2019. However, there weren’t details regarding the capacities of the new plants that will be installed. The wider use of this product resulted in a continued increase in the demand for the product.

Propionic acid is used as preservatives for foods primarily in baked products and cheese. It’s also used as an antibacterial agent for animal feed and grains. Donna Babcock, Dow Performance Intermediates’ business director, said, “Increased propionic acid capacity is a strategic investment in Dow’s long-term growth.Our newly announced plant expansion, extensive capabilities in chemical processing and deep market knowledge will ensure we continue to be a leading supplier into food and feed applications.”

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DowDuPont’s stock performance

DowDuPont stock fell 1.0% and closed at $70.00 for the week ending December 15, 2017. The fall in the stock price resulted in the stock trading below the 50-day moving average price of $71.10. After the merger, the stock rose 4.20%. However, analysts appear to be bullish on the stock. They expect DowDuPont’s stock price to be $81.04 in the next 12 months. It implies a return potential of 15.80% from the closing price as of December 15. DowDuPont’s 14-day relative strength index of 44 indicates that the stock isn’t overbought or oversold.

Investors looking for indirect exposure to DowDuPont can invest in the Materials Select Sector SPDR Fund (XLB), which has invested 23.20% of its portfolio in DowDuPont. The fund also provides exposure to Monsanto (MON), Praxair (PX), and Air Products and Chemicals (APD) with weights of 8.1%, 6.70%, and 5.50%, respectively, as of December 15, 2017.


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