ISP is latest ingredients provider to announce price increases

By Simon Pitman

- Last updated on GMT

Related tags: Price increases, Material, Cost

New Jersey-based supplier ISP has become the latest in a string of ingredients and raw material providers to announce price increases.

The news will put further pressure on finished goods markers, who are already suffering from the effects of a protracted economic downturn that is once again impacting economic growth in developed markets.

ISP said that it would increase global prices for polymers, vinyl monomers, specialty solvents, emollients, emulsifiers, preservatives and encapsulates by 10 percent from February 1, 2011.

The company also said that the price increases would only be implemented as and when existing supply contracts will allow.

Key ingredients are affected

Emollients, emulsifiers, preservatives and encapsulates are the ingredients that are most likely to hit finished goods makers in both the personal care and oral care categories, but the increases will also hit other sectors, including the pharmaceutical and beverage industries.

Price increases have filtered upwards in the supply chain, with major raw materials providers such as Sun Chemicals and BASF announcing significant price increases in the course or 2009, driven by higher energy prices and lower profit margins.

In the emerging markets finished goods providers are finding that healthy economic growth is helping to absorb these cost increases, but in the developed markets it is a different story.

P&G forecasts that material costs will impact 2011 results

Procter & Gamble, the world’s largest consumer goods company, became one of the first of the big players to acknowledge the impact of these price pressures when it announced just before Christmas that raw materials are likely to counterbalance gains made in emerging markets during 2011.

During an investor’s conference on December 15, the company said that these cost pressures could trigger a major rethink on many of its current business operations, leading to downsizing and further synergies.

In particular P&G executives have said that ‘the number of global manufacturing platforms is likely to be reduced by half in the next four years, which will see the number fall from 300 to 150 by 2014.

Related topics: Business & Financial

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