ISP announces further raw materials price hike

By Andrew McDougall

- Last updated on GMT

Related tags: Material

International Specialty Products (ISP) has announced plans to raise its prices by 10 percent in response to increasing raw material and energy costs.

The increase will cover all polymers, vinyl monomers, emollients, emulsifiers, preservatives and encapsulates ISP supplies to the cosmetics, pharmaceutical, performance chemicals, oral care, agricultural and food sectors.

The price hike is the second increase covering compounds used by the cosmetics manufacturing sector that New Jersey-based ISP has announced this year.

In a press statement, the company said: "This additional price increase is necessary due to continued material and energy cost escalation," ​and added that the new rates would come into effect on June 1 or as soon as existing supply contracts allow.

Second price hike this year

In the initial price increase announcement earlier this year ISP said that it would increase global prices 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.

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.

Both announcements are expected to 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.

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 last year 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: Market Trends

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