Dow announces sweeping product price increases

28 May 2008 14:18  [Source: ICIS news]

TORONTO (ICIS news)--Dow Chemical will on 1 June raise the prices of all of its products by up to 20% in response to surging energy costs, CEO Andrew Liveris said on Wednesday, blaming failed US energy policies.


The sweeping price increases and reviews were essential as the company attempted to mitigate the extraordinary rise in energy and related raw material costs, he said.


The increases would depend on the products’ exposure to rising energy, feedstock and transportation costs, he said, adding that all terms to all customers would be reviewed.  


"Our first quarter feedstock and energy bill leapt a staggering 42% year over year, and that trajectory has continued, with the cost of oil and natural gas climbing ever higher," said Liveris.


"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."


Liveris pointed the finger to failed US energy policies.


"For years, Washington has failed to address the issue of rising energy costs and, as a result, the country now faces a true energy crisis, one that is causing serious harm to America's manufacturing sector and all consumers of energy,” he said.


“The government's failure to develop a comprehensive energy policy is causing US industry to lose ground when it comes to global competitiveness, and our own domestic markets are now starting to see demand destruction throughout the US."


In addition to the price increases, Dow Chemical was continuing aggressive cost-control plans and accelerating a competitiveness review for all of its businesses and manufacturing facilities to better respond to the high feedstock and energy prices, he said.


Dow spent $8bn (€5bn) on energy and hydrocarbon-based feedstock costs in 2002.


At the current rate, those costs would climb to $32bn this year, the company said.


($1 = €0.64)


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By: Stefan Baumgarten
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