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Dow Chemical hikes prices 20 percent

May 28, 2008
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May 28, 2008 – (Reuters) - Dow Chemical Co., the biggest U.S. chemical manufacturer, said on Wednesday it would hike prices for all its products by up to 20 percent next month, the latest signal that escalating energy prices were stoking inflation.

Citing a sharp rise in the costs of energy, raw materials and transportation, Dow will raise prices globally on its broad slate of products that range from plastics and films to paints and agricultural supplies from June 1.

Dow's move came as little surprise to industry watchers, since prices for natural gas, a key feedstock for the chemical industry, have jumped by 56 percent since the end of 2007, and crude oil prices have rallied 32 percent to more than $125 per barrel.

But whether Dow can push through the price increases to its customers is not certain.

"So much will depend on what Dow's competitors do," said BB&T Capital Markets analyst Frank Mitsch. "Given the raw material inflationary environment, I would guess that most of their competitors will match them."

The Midland, Michigan-based company said its cost of energy and feedstocks surged 42 percent in the first quarter from a year earlier, and the jump in crude oil and natural gas prices was continuing.

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