INCREASE IN OIL PRICE AFFECTING CHEMICAL
(15 June 2008)
There are signs that the booming global economy is cooling down, initially due to the financial crisis triggered in the USA by the sub prime mortgage problem. Other factors like the extremely high oil cost and regional factors like the end of the boom for the Olympic Games and the recent Richter scale 9 earthquake in China add to the current economic woes.
Usually in a slower pacing economy, prices tend to go down, too. This is the normal behavior of an economy, but apparently we are moving in a new economic scenario with low interest rates, high inflation – and very high raw material prices.
At present, chemical companies, depending on oil based raw materials are having a serious cost issue, which is presently aggravated because raw material supplier have to pass on the hefty increases they suffer from the upstream value chain.
Due to these external factors which impact our cost position, we need to adapt our solid soda selling prices, too. We therefore will increase our prills and fused soda prices for new orders by about 18 %. Next month we will need to evaluate the pricing situation of our raw materials again to further adapt if necessary. We are aware that this will pass pressure to our customers and we hope that they too will be able to pass on the prices to balance the margins.
Alexander Denzler, GM of SODA