Nalco join wave of announcements on paper chemical price increases - Europe, Africa and Middle East

In yet another price increase announcement, Nalco Company has stated that it will immediately apply increases on a broad range of products for its Europe, Africa and Middle East customers across its three major divisions. 'Most increases will range from 7 to 30 percent, depending on the products' exposure to rising raw material, energy and transportation costs. In a few cases price increases in excess of 30 percent may apply.'

The price increases are driven by their increased energy and raw material costs, tightening availability of some raw materials, and rising freight costs.

Kemira 'enforce' global price increases for pulp and paper chemicals

Not to be outdone, Kemira Pulp&Paper announced that they too will 'enforce' global price increases, effective June 16th, 2008.

The Kemira Group will raise prices across its entire product portfolio and in some cases increases will exceed 25%. The increases reflect the increasing costs for raw materials, energy and transportation. No relief is expected in the near future, states Kemira´s President and CEO Harri Kerminen. "Under these conditions our only choice is to implement product price increases, while we will continue to take all measures to keep costs under control to minimize the impact on our customers."

We will attempt to try to track how effectively these announcements by the major paper chemical suppliers are implemented in the face of competition from the emerging companies in India and China. Watch this blog for updates.

Canda International

Nalco to increase prices of paper chemicals in Asia Pacific

Nalco has decided to increase prices on a broad range of products sold into the Asia Pacific market - the increase covers products across its three main divisions. Most increases will range from 7 to 30%, and will depend on the product's exposure to rising raw material, energy and transportation costs. In a few cases, as in products containing phosphate-derived raw materials, price increases will be well in excess of 30%.

The increase in Asia Pacific comes on the back of an earlier announcement of price increases for paper chemicals in North America.

Hercules increase paper chemicals prices in North America

Hercules Paper Technologies and Ventures announce they will initiate price increases in North America on all their paper chemicals by up to 30%, effective June 16, 2008. The focus will be on chemicals such as sizing, wet-strength and retention/drainage aids. The justification is linked to oil, natural gas and agricultural commodities which has seen many of their raw material prices increase by over 100% since last year. Hercules also point out some concerns about the availability of several key raw materials.

In addition to the price of barrel of crude oil, raw material availability is becoming a significant factor in determining raw material and final product cost and pricing. This is the case for products based on crude oil and those based on natural oils (eg palm).

Emulsion Polymers: Dow increases prices in Europe, Middle East, India and Africa

In yet another price increase announcement, Dow Emulsion Polymers stated that with immediate effect or as contracts allow, prices will be increased by € 280/MT (dry) for all styrene butadiene (S/B) latex based emulsion products sold into paper, carpet, and specialty applications in Europe, and up to $ 600/MT (dry) for S/Bs sold to Middle East, Africa and India. The increase is to help offset the rising costs of transportation, raw materials and energy.

FWA raw materials become tight - Opportunity for Chinese and Indian Producers

Not only are paper FWA (OBA) producers having to deal with the escalating price of raw materials linked to commodity price increases, there is now a growing shortage of raw materials used to make stilbene-based optical brightening (whitening) agents. One rumour has based the reason on the reduced output of the bigger Chinese producers.

The result is:

• Companies which are not back-integrated (eg Clariant) will struggle to get sufficient raw material to manufacture FWAs and will probably have to pay a premium
  
• Chinese producers (eg Transfar Whyyon Chemical) will further increase their prices on any material they have available after they have taken care of their own needs
  
• Indian producers will see this as an opportunity to develop their raw material business, which over the last few years has been eclipsed by the Chinese

The key raw materials are diamino stilbene (4,4'-diaminostilbene-2,2'-disulphonic acid), aniline disulphonic acid, cyanuric chloride and sulphanilic acid. One only has to look at the surge in p-nitrotoluene prices to surmise on the future impact of the recent market changes. It will also be interesting to watch how the major 4 suppliers (Ciba, Kemira, Clariant, Transfar) of paper OBAs (FWAs) manage their product supply and how market price increases are implemented. The need for access to supply from China and India has been emphasised before and now it may be difficult to secure supply and possibly too late.

The future looks bright for the Indian and Chinese producers.

PS: Some paper dyes are also based on stilbene chemistry

Keywords:
Paper Chemicals
Optical Brightening Agents
Fluorescent Whitening Agents

Nalco increases paper chemical prices in North America

Nalco announce the implementation of an 'additional' price increase for to the Paper industry in North America, effective July 1, 2008. Nalco will also implement price increases in other regions of the world, refelecting local increases in costs.

Customers in the United States and Canada will see a tiered price increase:

• most 'programs' will increase by up to 20%
• select 'programs', for example defoamers; gluteraldehyde; phosphate and polyphosphate chemistries; pulp mill surfactants; anti-scalants; and deposit control surfactants will increase by 30%

The price increases are driven by increased energy and raw material costs, tightening availability of some raw materials and rising freight costs.

Ciba Specialty Chemicals join rush to announce price rises

In a wave of announcements, Ciba today joined others in announcing price rises citing the reasons for the move as:

• Higher raw material, energy and transport costs

The increases will be, 'with immediate effect', across the entire product portfolio, some in excess of 20%.

Huntsman to raise prices

Huntsman Corporation announced price increases on all products - some of up to 25%. The justification is based on, 'Sharp and sustained increases in its costs for energy, commodity and intermediate feedstocks, and transportation. The amount of each price increase and energy surcharge will vary by product, in accordance with costs attributed to each product.'

Dow Chemical increases prices by up to 20%

Dow joins most chemical suppliers and producers in announcing price increases. In a corporate move, The Dow Chemical Company announced today that on June 1 it will raise the price of all of its products by up to 20% – depending on their exposure to rising energy, feedstock and transportation costs – and will review all terms with all customers.

The price increases and reviews are said to be essential as the Company attempts to recover the rise in energy and related raw material costs. A spokesman stated that their first quarter 2008 feedstock and energy bill increased 42% percent in the last year and that further increases are expected.

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.

Nalco also announce price increase for paper chemicals

Not to be outdone, Nalco has announced price increases effective 1st January, 2008. The increases are 8-12 percent (minimum) on specialty paper chemicals.

The announcement states, 'The price increase is driven by the increase in energy costs over the past six months, which impacts raw materials, freight and manufacturing costs. Some products have experienced more extreme cost increases due to supply shortages. These escalating costs of raw materials and freight can no longer be absorbed internally. Nalco's Paper Services Account Managers will contact individual customers to discuss how these increases are affected by specific contract terms.'

Ciba announce price increases for water-treatment chemicals

Yet another price increase announcement ......... again, the question is whether these announcements are starting to stick and show through to the bottom line.

Ciba Speciality Chemicals Ltd said it is raising prices by 5-15% for water and treatment chemicals to counter the continuing rises in energy, raw material and distribution costs. The price increases will be applied immediately or as contracts allow. Ciba admitted that despite ongoing programmes to improve efficiency and cut costs, rises in energy, raw material and distribution costs requires price increases across the ranges.

Clariant announces global price increases

Clariant announced a global price increase in the range of 5% to 12%. The price increases are justified as being necessary to compensate for raw material and energy cost rises. It is also imperative for Clariant to convince investors that it is serious about turning its business around and doing something to address the current very low share price.

BASF increase polymer emulsion and powder prices in Europe

BASF announced price increases for polymer emulsions and powders in Europe effective October 15 or as contracts allow.

• Polymer dispersions and additives will increase by €40 to €60 per metric ton
• Ploymer powders will increase by €80 to €100 per metric ton.
  

The reasons given for for these increases are increasing production and logistic costs.

BASF raises prices for sizing agents and colourants

BASF has announced that with effect from the 1st October, 2007 (as contracts allow), prices for sizing agents and paper colourants will increase by 20%.

The increases affect Europe, the Middle East and Africa.

The justification is based on raw material cost increases for products based on ethylene, propylene, fatty alcohols and acids, naphthalene, aniline and amines where costs have been driven upwards by high crude oil prices and energy costs. There is also the recent changes in tax refunds for export business from China combined with a Chinese environmental protection programme which have lead to a reduced supply of key raw materials and an increase in prices for intermediates.

This is yet another announcement by paper chemical suppliers which have struggled to realise price increases in line with increasing raw material costs.

BASF price increase for coating resins

BASF announced it will increase the price of its coating resins by up to 15%.

The big European multi-nationals continue to be under pressure to increase prices and they are all making announcements in the media. For products linked to commodity raw material prices, it is easier to justify and achieve increases (eg binders, flocculants); however, for the speciality end of the market it remains to be seen whether the prices are realised. It is also particularly difficult to raise prices for products which are competitively produced in China and India (eg colourants).

Ciba announce paper chemical price increases

Ciba announced it will initiate price increases for its paper chemicals ranging from 5-20%. The ranges affected are Pergasol dyes, Irgalite pigments, Tinopal optical brightening agents (fluorescent whiteneing agents). The target is to increase prices on 1st August, 2007 or as contracts allow. The price increases are justified on the, '...... significant cost increases in select raw materials coupled with recent changes in duties associated with Chinese exports.'

Again, it will be interesting to see whether the posturing feeds through to actual price increases in the face of significant competition from dollar-based or lower-cost suppliers; particularly those producing OBAs and dyes.

Clariant announce price increases for paper chemicals.

Clariant joins the crowd in announcing price increases in paper chemicals. The reasons given are:

• continuing high price of crude oil
• high energy costs
• increased raw material prices - particularly from China

The price increases affect dyes (10-30%); optical brightening agents - OBAs or FWAs - to increase by 10-15%; and polymer emulsions.

As with the other announcements, it remains to be seen whether they are realised and start to show through in the balance sheet.

Nalco announce paper chemical price increases effective July, 2007.

Another attempt at increasing prices ........ this time it is Nalco who have made an announcement in the press that states they will increase prices by 7% for 'speciality chemicals sold to paper industry customers', effective July, 2007.

How effective are these announcements? We are in the process of analysing announcements made by chemical suppliers and determining whether they are nothing more than PR 'spin' or whether they actually start to show through into the balance sheets of the paper chemical suppliers.