Dow Chemical increases prices again to fight relentless cost inflation
offset continued cost rises only weeks after increasing prices by
up to 20 percent.
In the latest set of increases, as much as 25 percent will be added to its prices affecting a broad swathe of industries including food, cosmetics and pharmaceuticals. Transport surcharges and price increases In addition to the price increases, which will be implemented in July, Dow will implement transport surcharges for North American customers where the company currently absorbs the freight costs. From August 1, a freight surcharge of $300 per truck shipment and $600 per rail shipment will be put in place. Dow said transport charges will be implemented in other geographical regions later in the year. Under the weight of higher oil prices and the slowdown in the US and Europe, some manufacturing plants will go idle or reduce production. Dow said production of ethylene oxide and acrylic acid in North America and polystyrene and styrene in Europe are being reduced by 15 percent or more. Unwelcome but necessary steps Dow chairman and CEO Andrew N. Liveris described the moves as "extremely unwelcome but entirely unavoidable" in the current energy climate. "The price increases we announced on May 28 helped, but they were not enough to fully cover the additional costs we are now facing," added Liveris. "Even since our last announcement, the cost of hydrocarbons has continued to rise, and that trajectory shows no sign of changing. "We must restore margins in our businesses, both through price increases and the reduction of operating costs at certain production facilities." Dow is also working hard to improve its access to lower prices and increase its energy efficiency. The company has increased its energy efficiency 22 percent between 1995 and 2005 and aims to beat that improvement for the following ten years.
