During the fourth quarter the company was forced to reduce production levels to 64 per cent, a 25-year low. In December, a traditionally weak period of demand for chemicals, production was at 44 per cent of capacity. Demand has slumped as global economies fell into recession.

Dow’s sales were down 23 per cent from the fourth quarter of 2007, to $10.9bn, while sales by volume declined by 17 per cent across all operating and geographic areas. Prices for products were down 6 per cent.

Sales in India, the Middle East and Africa were down from $469m to $311m in the fourth quarter of 2008, with sales volume down 34 per cent.

The loss of $1.55bn compares to a profit of $472m in the same period of 2007.

Additionally, the company said that charges of $978m related to restructuring activities, goodwill impairment losses and the collapse of the K-Dow venture with Kuwait’s Petrochemicals Industry Company (PIC), among other issues, also negatively impacted earnings.

The $17.4bn K-Dow venture would have provided Dow with $9bn in cash. The collapse of the deal cost the company $69m. Dow is still believed to be pursuing legal action against PIC to claim a $2.5bn break-out fee.

Dow’s inability to complete the purchase of specialty chemicals maker Rohm and Haas after the collapse of K-Dow cost it a further $31m.