Shares of materials science company Dow (NYSE:DOW) are trending higher in the pre-market session today after its board of directors declared a final decision for its Fort Saskatchewan Path2Zero investment. As a result, the brownfield investment will be the “first net-zero Scope 1 and 2 emissions ethylene and derivatives complex” globally.
The $6.5 billion complex will include a new ethylene cracker, an increase in polyethylene capacity to 2 million MTA, and a retrofit to the existing cracker. This strategic move is anticipated to result in an annual EBITDA growth of $1 billion over the project’s economic cycle and help the company decarbonize 20% of its global ethylene capacity.
With this new capacity addition, Dow expects to meet the rising demand in various markets such as packaging, infrastructure, and hygiene. Furthermore, the company plans to commence project construction in 2024, with phased capacity additions.
The West Canadian region provides cost-competitive natural gas and ethane, which is a crucial feedstock in the production of ethylene. Consequently, Dow expects the project to be one of its most competitive facilities globally.
What is the Projection for DOW Stock?
Overall, the Street has a Moderate Buy consensus rating on Dow and the average DOW price target of $55.70 implies a modest 9% potential upside. That’s after a nearly 6.3% rise in the company’s share price over the past month.
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