Jeff Tate
Chief Financial Officer at DOW
Thank you, Jim, and good morning to everyone joining our call today.
Moving to Slide 7, we continue to experience muted demand across some end-markets and regions with the greatest pressure in Europe and China. Global manufacturing PMI has been decelerating over the past three months and consumer spending remains pressured by persistent inflation. That said, we're monitoring the impact of rate cuts in the US and Europe, as well as recent stimulus plans in China to boost economic activity, which could provide some positive momentum for 2025.
Looking specifically across our four market verticals, in packaging, domestic demand in North America is resilient and exports are robust, despite decelerating last month. Demand in Europe remains soft, consistent with manufacturing PMI at the lowest point year-to-date. In addition, China's manufacturing PMI returned to contractionary levels in September after improving in August. Infrastructure demand primarily in residential construction remains low. In the US, housing starts decelerated to negative 0.7% year-over-year in September. Eurozone construction PMI remained soft and new home prices in China declined year-over-year for the 15th consecutive month.
Consumer spending has slowed across the globe, reflecting affordability challenges. We've seen consumer confidence weaken in the United States, remain negative in Europe, and decline in China for the fifth consecutive month. And in mobility, demand has softened globally. In the US, auto sales were slightly up year-over-year in September after decreasing in August. And in the EU, new car registrations declined in September after reaching a three-year low in August. China auto production declined for the fourth consecutive month, reflecting weak domestic demand, as well as exports due to tariffs imposed in Europe.
Now turning to our outlook on Slide 8. We expect fourth quarter earnings to be approximately $1.3 billion, up year-over-year and lower quarter-over-quarter, as normal seasonality plays out.
Now looking into the sequential drivers by segment. In the packaging and specialty plastic segment, lower integrated margins stemming from higher feedstock costs and lower licensing revenue will be a headwind. Following an unplanned event in July, we restarted our Texas-8 cracker at the end of the third quarter, and we expect to ramp operating rates steadily throughout fourth quarter. This will generate an add-back of approximately $100 million in the fourth quarter. We also expect lower planned maintenance activity across multiple sites along the US Gulf Coast and in Europe to provide a tailwind sequentially.
In the industrial, intermediates, and infrastructure segments, conditions remain mixed. Demand in building and construction end-markets, will be seasonally lower, but we expect the ongoing ramp of our plant at Louisiana operations, as well as the seasonal uptick in demand for deicing fluid, to offset this decline. In addition, we anticipate a $50 million tailwind through the lower planned maintenance activity along the US Gulf Coast. And in the Performance Materials and Coatings segment, we see continued growth in downstream silicone applications across most end-markets. However, this is expected to be offset by ongoing weakness in the China property sector. In addition, lower seasonal demand for building and construction end markets is expected to be a headwind of approximately $125 million.
Moving to Slide 9. Team Dow has built a very compelling investment opportunity even as our industry has faced volatile market conditions over the past few years. By continuing to execute our playbook, deliver on our financial priorities and advance our strategy, we are positioning Dow for long-term value growth. Importantly, we have built the financial flexibility to continue disciplined investment in areas that will raise our underlying earnings, reduce emissions and advance customer circularity needs to drive growth. As it relates to our financial strength, Dow has ample liquidity and a strong investment grade-credit profile.
Nearly all of our long-term debt is at a fixed rate and we have no substantive maturity until 2027. We also expect to enhance our near-term cash flow generation through the execution of unique-to-Dow cash flow levers And we are making solid progress on the evaluation of strategic options for our non-product producing infrastructure assets. As previously mentioned, we anticipate generating over $1 billion in proceeds from the transaction and we expect to share further progress yet this year. Dow's strong financial flexibility, allows us to advance our long-term growth strategy. Notably in the Q3, the team is making good progress on the construction of our Path2Zero project in Fort Saskatchewan. Major foundation work began and approximately 40% of cracker pilings are complete.
Aligned to our capital deployment schedule for the project, we expect to receive more than $1.5 billion in cash and tax incentives with more than 80% received by 2030. Our near-term growth projects remain on track to deliver more than $2 billion of underlying EBITDA. This includes capacity expansions in silicones this year that will deliver approximately $70 million of annual EBITDA at full run rates. In our Transform the Waste strategy is expected to deliver more than $500 million of EBITDA by 2030. In the third quarter, we added new products to our growing circular portfolio. This includes REVOLOOP Recycled Plastic Resins that incorporate post-consumer recycled material into cable jacketing. We also introduced the 1st Bio Circular Engage REN polyolefin elastomers for carpet tile backing.
And with that, I will turn the call back over to Jim.
