PREVIEW-High hopes for Dow Chemical on commodity business

* Third-quarter earnings due Thursday, Oct 28

* Commodity business expected to shine

* Specialty chemicals seen as rebounding

* StarMine data points to 2.2 pct positive surprise

By Ernest Scheyder

NEW YORK, Oct 26 (BestGrowthStock) – Strong commodity chemical
sales likely once again boosted Dow Chemical’s (DOW.N: )
quarterly profit, and analysts are beginning to see the
company’s pricey 2009 acquisition of specialty chemicals maker
Rohm & Haas pay off.

Products from legacy Rohm units primarily go into specialty
chemicals, including Apple Inc (Read more about Apple stock future.)’s (AAPL.O: ) iPhone. Demand for
those high-priced gadgets, which plunged during the recession,
has begun to improve.

But commodity chemicals, which tend to be low-margin,
high-volume products like plastics and chlorine, were likely
the breadwinner during the third quarter, analysts say.

“I think the standout will be the commodity part of the
business,” Alembic Global Advisors analyst Hassan Ahmed said.
“That’s not to say the specialty business is underperforming.
You should see a good balance in both sides.”

Midland, Michigan-based Dow is expected to report earnings
of 41 cents a share, according to Thomson Reuters I/B/E/S. But
StarMine SmartEstimates, which puts more weight on recent
forecasts of top-rated analysts, points to a profit that could
surpass the consensus estimate by 2.2 percent.

In the third quarter of 2009, Dow reported a profit of 24
cents a share, excluding one-time items.

For a graphic contrasting Dow Chemical with rival DuPont
click on

Part of Wall Street’s bullishness comes from expectations
for improving polyethylene margins, with lower feedstock costs
and mostly flat prices, Ahmed said.

Dow is one of the largest global suppliers of polyethylene,
the world’s most widely used plastic.

Earlier this month SABIC (2010.SE: ), the Saudi Arabian
state-owned chemical company, said quarterly profit rose 46
percent due in part to strong demand for plastics and
petrochemicals. [ID:nLDE69G09A]

A Dow executive told Reuters earlier this month that the
company was interested in buying a stake in an oil or natural
gas field, a development that would lower its costs and give it
direct access to necessary feedstocks for chemical production.

Analysts will be looking for any news on this front during
the company’s conference call, set for 10 a.m. EDT on

Shares of Dow Chemical have risen about 9.3 percent so far
this year, compared with an 8.7 percent rise in the S&P
Chemicals index.
(Reporting by Ernest Scheyder, editing by Matthew Lewis)

PREVIEW-High hopes for Dow Chemical on commodity business