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DuPont Plans to Increase Prices

Posted on: Tuesday, 13 September 2005, 18:00 CDT

Sep. 13--Reeling from soaring energy costs, DuPont Co. said yesterday that it would increase prices on about 35,000 products that go into kitchen countertops, police safety vests, cell phones, and a host of other items.

The Wilmington company would not say how much prices will rise on specific products, but said the first of the increases could come as quickly as next week. DuPont's 80 business units will make the changes, the company said.

The announcement by DuPont, one of the nation's largest industrial companies, is evidence of inflationary pressure building from oil and natural-gas prices. Consumer-price inflation was running at an annual rate of 3.2 percent until this summer. In July it increased to an annualized rate of 6 percent because of higher energy prices, said Richard DeKaser, chief economist with National City Corp. in Cleveland. He said he expected the elevated inflation rate to remain for the next few months but then decline as energy prices do.

DuPont sells some of its products, such as Tyvek house wrap, to consumers in retail stores, but most of its products are distributed through other companies or sold as raw materials to manufacturers. DuPont also has a large biotech seed business in the heartland.

DuPont, which acknowledged this summer that it had underestimated how quickly crude-oil prices would rise, said higher prices for oil and natural gas could add $13.5 billion in raw-material costs to U.S. chemical companies for the year.

Even before Hurricane Katrina damaged production rigs in the Gulf of Mexico and refineries on the Gulf Coast, tight global supplies were pressuring energy prices.

"This is real, and it's here to stay," Diane H. Gulyas, DuPont's chief marketing officer, said yesterday in an interview. "It goes beyond Katrina. Katrina certainly exacerbated a bad situation."

DuPont has concluded that there is an imbalance between growing energy consumption worldwide and new energy supplies, and that this will keep prices high for some time, Gulyas said.

"We are just starting to see the tip of the iceberg, with people in different industries looking at the reality of the new energy situation and how to deal with it," she said.

Crude oil closed at $63.34 a barrel yesterday on the New York Mercantile Exchange, down 74 cents for the day but up 44 percent in the last year.

Evoking a phrase common in the 1970s, Kevin Swift, chief economist with the trade group American Chemistry Council, said yesterday: "This is a supply shock." The chemical industry "consumes an awful lot of energy," Swift said, and natural gas is a big concern to chemical companies.

"Oil and natural gas are pushing inflation on the chemical companies and the economy," said Frank Mitsch, chemicals analyst with Fulcrum Global Partners L.L.C. in New York.

GOING UP

Prices of almost all of the 35,000 products that DuPont Co. sells are on the way up. Among the company's products:

Tyvek house wrap

Kevlar safety material

Corian countertops

Pioneer biotech seeds

Hot Hues automotive paint

SentryGlas security glass

Teflon nonstick coating

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DD,

Source: The Philadelphia Inquirer

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