VAM price hike just one of many by Dow Chemical

Tag : Textiles Chemical

Industry leader Dow Chemical has joined other suppliers who plan tobe selling vinyl acetate monomer (VAM) at 93¢/lb in July aftertwo price hikes amounting to 6¢ when fully implemented inresponse to the current climate of increased costs of energy andraw materials. The chemical is used in the manufacture of emulsionpolymers, resins and other intermediates for paints, adhesives,coatings, textiles, wire and cable, laminated safety glass,packaging, automotive parts and acrylic fibers.
VAM spot-sales prices have been steady for some months because ofweak domestic sales, but a recent report on the ICISpricing.comsubscription web site noted: “Buyers say third quarter pricehike proposals issued by producers will be hard to ignore,considering that they are part of broad rate hikes sought fordozens of petrochemicals due to the runup in energy prices.”
Dow Chemical, in particular, now has announced two rounds of pricehikes —20% announced in June and 25% in July—which theMidland, Mich., firm says has been caused “by the continuingrelentless rise in the cost of energy and hydrocarbonfeedstocks.” Dow also plans to implement a freight surchargeof $300 per shipment by truck and $600 per shipment by rail,effective August 1. The surcharge applies to North Americacustomers buying chemicals, hydrocarbons and plastics where Dowabsorbs the freight.
Dow's price hikes tend to lead a parade of other chemicals makersboosting prices to pass on higher raw-material costs to theircustomers. In a statement, Dow CEO Andrew N. Liveris says the price increases are “extremely unwelcome but entirelyunavoidable” as the global cost of oil, natural gas andhydrocarbon derivatives surge ever higher. He says that Dow’ssix-month feedstock and energy costs are up more than 40% from ayear earlier. Dow uses oil-based products and natural gas as rawmaterials and is a heavy user of energy to power manufacturingplants.