Chemical Prices Soar


Citing skyrocketing costs for energy, feedstocks, raw materials and transportation, Dow Chemical Co., Huntsman Corp., and Ciba last week each announced across-the-board price increases for all their products, which include many chemicals used in lubricants, lubricant additives, metalworking fluids and solvents.

Midland, Mich.-based Dow Chemical on May 28 said that on June 1 it would raise the prices of all its products in all geographies by up to 20 percent – depending on their exposure to rising energy, feedstock and transportation costs – and will review all terms to all customers. Dow subsidiaries include Dow Biocides and Angus Chemical, which makes nitroalkanes and derivatives used in metalworking fluids.

Chris Huntley, spokesman for Dow Chemical, said the company has told its subsidiaries to push prices up as much as the numbers indicate they need to, to address the issue of rising feedstock and energy costs.

The actual amount of the increase depends on the business, Huntley told Lube Report. Weve basically put notice to everybody that these costs are now extremely high. We can no longer afford to just keep trying to do what we can do to mitigate it. Everybody needs to be prepared for price increases that reflect the additional cost burden were facing.

Dow Chairman and CEO Andrew Liveris said the sweeping price increases and reviews are essential. Our first quarter feedstock and energy bill leapt a staggering 42 percent year over year, and that trajectory has continued, with the cost of oil and natural gas climbing ever higher, Liveris 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.

Dow spent $8 billion on energy and hydrocarbon-based feedstock costs in 2002. At the current rate, those costs would climb to $32 billion this year. In addition to these price increases, the company is continuing its aggressive cost-control plan internally and is accelerating its existing top-down competitiveness review for all of its businesses and manufacturing facilities in the light of these new feedstock and energy prices, Liveris said.

The company is the worlds largest producer of polyalkylene glycol (PAG). Dow also makes amines products such as alkyl alkanolamine and isopropanolamine. Isopropanolamines are used in water-based metalworking fluids to protect against corrosion and improve lubricity. Alkyl alkanolamines are used in additives that lower the pour point of lubricating oils. Dow also makes a variety of oxygenated solvents.

Woodlands, Texas-based Huntsman on Thursday said that it will raise prices for all its products, some by as much as 25 percent, and also impose an energy surcharge across a wide range of products. The amount of each price increase and energy surcharge will vary by product, the company said, in accordance with costs attributed to each product. The price increase and any necessary surcharge will be effective immediately or as soon as applicable contracts allow.

We hope we have seen the worst of the energy and commodity price increases, but the impact of large scale speculation by traders on the price of energy, in addition to the increased costs we are absorbing from our raw material suppliers and service providers, cannot be underestimated, said Peter Huntsman, president and CEO. Having implemented aggressive internal steps to manage these costs, we are now reviewing all Huntsman products and are announcing specific price increases, as well as an energy surcharge to be applied to each product where warranted.

Huntsmans Performance Products division makes a variety of amines used in lubricants and solvents. Lubricant and fuel additives are key applications for Huntsmans polyetheramines. Its ethyleaneamines are used in ashless dispersants for engine oils and in other lubricants. The divisions functional fluids are used as lubricants, solvents, heat transfer fluids and chemical intermediates.

The company also makes morpholine, which is used as a corrosion inhibitor and an intermediate for textile lubricants, and diglycolamine, which is used as a selective solvent for recovery of aromatics from refinery streams, and in preparation of metalworking products. Another Huntsman product, aminopropylmorpholine, is a morpholine derivative used as an intermediate for lube oils and fuels, and specialty surfactants.

Basel, Switzerland-based Ciba on Friday announced global price increases across all product ranges effective immediately, some in excess of 20 percent. Cibas additives are sold into lubricant applications primarily under the trade names Ciba Irganox, Irgalube, Irgacor, Irgamet and Irgafos.

Further immediate price increases are needed to fully reflect the exposure of our products to unprecedented increases in raw material, energy and transport costs, said Brendan Cummins, Ciba chief executive officer. In addition to these sales price increases, we will accelerate our efforts to improve efficiency and productivity across our operations.

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