Dow to raise product prices by 20 per cent as energy, feedstock costs mount

29 May 2008

Dow Chemical Company plans to raise product prices across the board by by at least 20 per cent beginning June 1, in a move that will impact prices of most consumer goods from plastic bags to food and detergents.

Dow, one of the largest chemical companies in the world, attributed the sweeping price increases to the extraordinary rise in energy and related raw material costs.

Midland, Michigan-based Dow said while the prices of all its products will go up, the extent to which prices are raised will depend on on the product's exposure to rising energy, feedstock and transportation costs. Dow said it will also review all terms to customers.

It is likely that the company would increases prices of specialty chemicals, which perform such functions as making plastics lighter and stronger, fabrics more durable and paints more fade-resistant, most, analysts said.

Dow, which uses hydrocarbon-based products and natural gas as raw materials for its chemicals and is a heavy user of energy to power its manufacturing plants, said its energy and feedstock cost is expected to top $32 billion this year against $8 billion in 2002.

''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,'' Andrew N. Liveris, Dow chairman and CEO said. ''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,'' he added.