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alstry (< 20)

Dow Playing Poker with Prices



June 24, 2008 – Comments (0)

MIDLAND, Mich., June 24, 2008 /PRNewswire-FirstCall via COMTEX/ -- The Dow Chemical Companywill raise the price of its products by as much as an additional 25 percent in July in an effort to offset the continuing relentless rise in the cost of energy and hydrocarbon feedstocks.

The Company also will implement a freight surcharge of $300 per shipment by truck and $600 per shipment by rail, effective August 1.

Furthermore, the Company is moving ahead with plans to temporarily idle or reduce production at a number of manufacturing plants. Dow has reduced its ethylene oxide production worldwide by 25 percent, and idled 30 percent of its North America acrylic acid production. The Company also will idle 40 percent of its European styrene production capacity, and has reduced its European polystyrene production rate by 15 percent. These actions are due to the slowdown in the U.S. and European economies, and the recent surge in hydrocarbon feedstock costs.

"The price increases we announced on May 28 helped, but they were not enough to fully cover the additional costs we are now facing. For the first half of 2008, our feedstock and energy costs are up more than 40 percent compared with the same six months of last year. Even since our last announcement, the cost of hydrocarbons has continued to rise, and that trajectory shows no sign of changing," he said. "We must restore margins in our businesses, both through price increases and the reduction of operating costs at certain production facilities.

Now businesses are reraising after less than one month.  I raise 20% on June 1st and I reraise another 25% plus bumping delivery charges and shutting down plants.  At some point we simply run out of chips.

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