Dow Chemical sets more price hikes
June 27, 2008
According to Reuters,
Dow Chemical Co, the biggest U.S. chemicals manufacturer, said recently
it will boost its prices as much as 25 percent, institute freight
surcharges and cut output of some products because of soaring energy
The price hikes come after
last month''s across-the-board 20 percent increase by the Midland,
Michigan-based company, which makes thousands of products ranging from
plastic wraps to car parts and insecticides.
Dow said it is also undertaking a series of cost reduction measures on
staffing, facilities and spending at its automotive unit because of the
decline in North American auto sales.
The chemical maker''s costs for oil and natural gas feedstocks and its
energy bills have jumped fourfold over the past five years to an
estimated $32 billion this year.
The price increases announced on May 28 were not enough to cover
additional energy prices increases, according to Chairman and Chief
Executive Officer Andrew Liveris.
Oil prices have jumped 44 percent so far this year, including a $9 per
barrel jump since Dow''s last price hike, while natural gas prices have
surged 75 percent.
The company also trimmed its production of the industrial chemical
ethylene oxide by 25 percent and idled 30 percent of its North American
acrylic acid output. Dow will idle 50 percent of its European styrene
production and has cut European polystyrene production by 15 percent.
Liveris again called for the U.S. government to overcome political squabbling and pass energy measures to increase supplies.
From August 1, Dow will implement a surcharge of $300 per shipment by
truck and $600 per shipment by rail in North America for customers
buying chemicals, hydrocarbons and plastics. Freight charges will be
applied in other regions later this year.