Dow Chemical 2013 Annual Report Download - page 62

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In July 2012, the Chinese Ministry of Commerce ("MOFCOM") initiated antidumping and countervailing duty investigations
of imports of solar-grade polycrystalline silicon products from the United States and Korea based on a petition filed by Chinese
solar-grade polycrystalline silicon producers. The petition alleged that producers within these countries, including Dow
Corning, exported solar-grade polycrystalline silicon to China at less than fair value, and that production of solar-grade
polycrystalline silicon in the United States has been subsidized by the U.S. government. On January 20, 2014, MOFCOM
issued a final determination that resulted in antidumping duties on producers in the United States and Korea ranging from 2.4
percent to 57 percent, including duties of 53.3 percent on future imports from Dow Corning. In addition, countervailing duties
of 2.1 percent were imposed. The requirement for customers to pay provisional duties on imports from solar-grade
polycrystalline silicon producers became effective July 24, 2013 for the antidumping duties and September 20, 2013 for the
countervailing duties. Dow Corning will not be subject to duties for previous sales. Dow Corning is evaluating possible actions
in response to the final determination. Dow Corning's polycrystalline silicon products accounted for a significant portion of its
operating results.
2012 Versus 2011
Electronic and Functional Materials sales were $4,481 million for 2012, down from $4,599 million in 2011. Sales decreased 3
percent from 2011, with price down 2 percent (with more than one-half of the price decline due to currency) and volume down
1 percent. Price decreased in most geographic areas and across most major business units in response to decreasing raw
material costs. Volume declined as increased demand for chemical mechanical planarization pads and slurries in Asia Pacific
was more than offset by weaker demand for specialty polymers used in home and personal care applications and specialty
cellulosics used in food and pharmaceutical applications, notably in North America. EBITDA for 2012 was $958 million, down
from $1,084 million in 2011. EBITDA decreased from 2011 as lower selling prices and higher operating costs associated with
planned maintenance turnarounds more than offset lower raw material costs and lower SG&A expenses. EBITDA for 2012 was
negatively impacted by $65 million of certain items, as previously discussed.
Dow Electronic Materials sales in 2012 were down 3 percent from 2011, with price down 2 percent and volume down 1
percent. Price decreased in all geographic areas driven by continued competitive pricing pressure, especially in Asia Pacific.
Volume declines in North America and Asia Pacific more than offset improvements in EMEA and Latin America. Volume
declined in Display Technologies primarily due to lower demand for optical filters used in televisions and other displays.
Volume decreased in Interconnect Technologies due to lower demand for printed circuit boards used in personal computers.
Semiconductor foundry utilization rates held steady across the industry in 2012 and higher demand for chemical mechanical
planarization pads and slurries drove volume growth in the Semiconductor Technologies business unit.
Functional Materials sales in 2012 were down 2 percent from 2011, entirely related to the unfavorable impact of currency on
price. Price decreased in most geographic areas, especially in EMEA. Volume was flat as higher industrial demand for specialty
amines and polymers was offset by lower demand for home and personal care products and lower demand for cellulosics used
in food and pharmaceutical applications.
Electronic and Functional Materials Outlook for 2014
Electronic and Functional Materials sales are expected to increase due to continued global economic recovery and demand
growth in the electronics, energy, pharmaceutical, food, personal care and home care industries. The Company expects
continued strong demand in OLED used in mobile applications and televisions.
Dow Electronic Materials sales volume is expected to increase due to new product launches including advanced photoresists
and advanced chip packaging used in personal computer memory applications and circuit boards, while continued but modest
growth is expected for media tablet and mobile phone devices.
Functional Materials sales are expected to increase, especially in emerging geographies, due to higher demand for home and
personal care products, higher demand for specialty biocides and for cellulosics used in food and pharmaceutical applications.