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Dow’s Epoxy Resin Business Under Pricing Pressures

11 June 2004

The Dow Chemical Company says that the epoxy resin business remains under intense upward pressure on pricing as supply tightens due to rising global demand and raw material and energy costs continue to soar.

“An increasingly tight supply and demand balance of epoxy products, plus persistently high and volatile hydrocarbon feedstock and energy costs are driving up prices of our epoxy products globally. This is impacting all market segments from coatings to electrical laminates and others,” says Patrick Ho, business vice president, Epoxy Products and Intermediates (EP&I) at Dow. “We are seeing unprecedented high volatility on feedstock costs across the whole value chain. Under this very challenging environment, it is critical that we find ways to build greater flexibility into our pricing structure so we can respond promptly to market changes.” Ho adds, “As a company, Dow is moving away from price protection practices that have historically been in place, and the epoxy business is no exception. Based on our best forecast, we do not see any immediate relief on hydrocarbon costs nor industry balance. We are working with our customers on implementing the full price increase that took effect early this month.”

Ho also cites the tightening of supply as another factor putting pressure on Dow epoxy resin prices. “As the world economy continues to recover, demand for epoxy products is up across the globe, particularly in Asia Pacific. Our manufacturing facilities, including the newly started unit in Zhangjiagang, China, are all operating at full capacity to ensure reliable supply to our customers.”

Chlorine and propylene, made from petroleum oil (refined crude oil), or petroleum gases, are some of the main raw materials used to manufacture epichlorohydrin, which combines with bisphenol-A to make epoxy resins. Each of these raw materials are also used to make many other products such as polypropylene plastic, water treatment polymers, polycarbonate and PVC. Demand for these and other downstream products affects the availability and prices of intermediates for epoxy resins.

“With our fully integrated business capabilities, Dow is well positioned and very committed to support the epoxy market with high-quality products and reliable services,” says Ho. “We will continue to invest in product innovation and world-class production and supply capabilities to better service our customers on a global basis. We see our commitment as a key source of differentiation and industry leadership.”





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