Dow Chemical Co. (Midland, MI) is not resting in the face of energy and feedstock price increases, announcing a second wave of price increases (up to 25% in July) on top of the price hikes in announced it late May, while also adding freight surcharges and idling or reducing capacity at ethylene oxide, acrylic acid, styrene, and polystyrene (PS) facilities worldwide. The freight charges will run Dow customers $300/truck shipment and $600/rail shipment starting August 1, 2008. They apply to North American customers for whom Dow currently absorbs freight costs. Dow said such surcharges could expand to other geographic locales later this year, where deemed appropriate.
In addition, Dow has reduced global ethylene oxide production by 25%, and idled 30% of its North American acrylic acid production and 40% of its European styrene production capacity. Furthermore, it has cut its European PS production rate by 15%. Dow Building Solutions temporarily idled 20% of its European capacity for Styrofoam insulation, and earlier in June it announced plans to idle three Dow Emulsion Polymers plants, representing 25% of North America capacity and 10% of European capacity. In addition to rising hydrocarbon feedstock costs, Dow cited a slowdown in the U.S. and European economies as rationale for its actions.
Company chairman and CEO, Andrew Liveris, said that through the first six months of 2008, feedstock and energy costs were up more than 40% compared to the same time period last year. Since Dows last price increase announcement, Liveris said cost of hydrocarbons has continued to rise, and that trajectory shows no sign of changing.[email protected]