Is there a away to lower the hwm for a tablespace which consist of multiple raw device containers? I reorged the tables in this tablespace and the hwm actually increased.

Thanks

Depending on how your data were arranged originally, you may need to run reorg once more if after the first reorg the used extents accumulated towards the tail end of the tablespace. Use "db2dart /dhwm" to see if there is empty space at the beginning of the tablespace.

PS. Why would you care about the HWM in raw containers?

We use the production db in a lot of redirected restores in test environments.

Try db2dart with /lhwm. Please see the following technote:
IBM - Lowering the High-Water Mark of a Tablespace

An offline reorg builds the shadow copy of table in the same tablespace (by default) so it's possible for the HWM to increase.