Dow Chemical plans a 25% price hike in addition to last month's 20% increase

25-Jun-08

USA's largest chemicals manufacturer Dow Chemical Co., plans a 25% price hike in a bid to meet freight surcharges as well as reduce output of few products affected by elevated energy costs. The price hikes come after last month's across-the-board 20% increase announced by the company, which were not enough to cover additional energy prices increases. The company is also undertaking a series of cost reduction measures on staffing, facilities and spending at its automotive unit because of the decline in North American auto sales. Dow has pruned production of ethylene oxide by 25% and idled 30% of its North American acrylic acid output. Dow will also idle 50% of its European styrene production and reduce European polystyrene production by 15%. Dow's bill for oil and natural gas feedstocks as well as energy has increased fourfold over the past five years to an estimated $32 bln this year. From August 1, Dow will implement a surcharge of US$300 per shipment by truck and US$600 per shipment by rail in North America for customers buying chemicals, hydrocarbons and plastics. Freight charges will be applied in other regions later this year.