Q: What is Dow's outlook for PG in 2005?
A: Overall, Dow forecasts 2005 growth to be consistent with global GDP, which is in line with our long-term demand growth expectations.

Dow expects that energy and raw material costs will maintain their historical highs and will continue putting pressure on pricing in 2005.

Q: What is the current supply/demand situation for PG?
A: In 2004, global demand for all propylene glycols was 3.1 billion pounds. Based on industry sources, overall industry production capability is about 3.2 billion pounds. The current global supply for PG is tight throughout the industry and demand remains high on a global basis. This is partly due to demand competition for PO supply with polyurethane producers.

Q: What is driving demand for PG at the moment?
A: A number of factors drive demand for PG. Typically, PG trends align with the economy; as the economy improves, so does demand for PG. Personal care, food, pharmaceutical and unsaturated polyester resin (UPR) applications have continued at their normal, constant growth rates in spite of economic slowdowns. In addition, factors such as cold weather influence seasonal demand for PG in aircraft deicing fluid (ADF)-type applications.

Q: What effect do the significantly high feedstock and natural gas costs have on PG pricing?
A: Significantly high propylene and natural gas costs have made price increases necessary to achieve sustainable margins. However, Dow's price increases have not been able to completely offset these costs. Managing the impact of propylene volatility and natural gas prices remains a challenge for Dow and the customers who rely on these products.

These trends also are causing an increase in prices for other PO derivative products that PG must compete with for raw material.

Q: What is Dow's competitive position in the market?
A: Dow's current global capacity for propylene glycols is approximately 1.2 billion pounds per year, making Dow the largest PG producer in the world. Additionally, Dow operates PG production facilities in all geographic regions.

Q: Has Dow announced any price increases recently?

A: Effective October 1, 2004, Dow increased prices for propylene glycols by $.05/lb in North America and Latin America.
Effective November 15, 2004, Dow increased prices for propylene glycols by $.05/lb in North America and Latin America.
Effective December 1, 2004, Dow increased prices for propylene glycols by $.10/lb in North America and Latin America.
Effective January 1, 2005, Dow increased prices for propylene glycols by $.10/lb in North America and Latin America.
Effective March 1, 2005, Dow increased prices for propylene glycols by $.05/lb in North America and Latin America.
Current pricing reflects a combination of raw material prices and competition for PO molecules with urethane polyols. While prices increased significantly in 2004, they have not reached the levels of the last industry cycle peak.

Dow, with a global capacity of more than one billion pounds, is the industry leader in the manufacture of propylene glycol. With a global capacity of more than four billion pounds, Dow is the industry leader in the manufacture of propylene oxide. Dow has production facilities in Texas, Louisiana, Germany and Brazil.

Dow offers propylene oxide, monopropylene glycol (MPG), dipropylene glycol (DPG) and tripropylene glycol (TPG) globally. For more information about Dow Oxides and Glycols, visit the www.dowpo.com and www.dowpg.com websites.