Energy costs drive up raw material prices

Midland, Mich.-based Dow Chemical Company has announced that it raised the prices of all of its products by up to 20 per cent on June 1. The rise in price depended on their exposure to rising energy, feedstock and transportation costs, the company said. Dow also noted that it would review all terms to all customers.

“Our first quarter feedstock and energy bill leapt a staggering 42 per cent year over year, and that trajectory has continued, with the cost of oil and natural gas climbing ever higher,” said Dow chairman and CEO Andrew Liveris. “The new level of hydrocarbons and energy costs is putting a strain on the entire value chain and is forcing difficult discussions with customers about resetting the value proposition for our products.”

Dow said it spent $8 billion on energy and hydrocarbon-based feedstock costs in 2002. Those costs would climb to $32 billion this year.

Tex.-based Huntsman Corporation has also announced that it will raise prices for all products — some by as much as 25 per cent — and impose an energy surcharge across a wide range of products.

“We hope we have seen the worst of the energy and commodity price increases, but the impact of large scale speculation by traders on the price of energy, in addition to the increased costs we are absorbing from our raw material suppliers and service providers, cannot be underestimated,” said president and CEO Peter Huntsman.

“Having implemented aggressive internal steps to manage these costs, we are now reviewing all Huntsman products and are announcing specific price increases, as well as an energy surcharge to be applied to each product where warranted,” he continued.

The company would only say that the price increases and surcharges would be effective immediately, or “as soon as applicable contracts allow.”

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