Effective Sept. 13, the Dow Emulsion Polymers business is increasing the prices of all latex sold into the carpet industry by 5 cents per pound (dry) in the United States and Canada. This increase is in addition to the 5 cents-per-pound August price increase. All other terms and conditions remain the same.

"While we see firmness in latex demand and increasing tightening of raw material supply, we are dealing with continuing volatility in oil pricing and energy costs and, consequently, unusually high feedstock prices," said Horacio Percossi, vice president, Dow Latex. "The impact of these mixed market fundamentals has created a much higher cost base. Dow can no longer absorb the increases in raw material costs and must work to restore margins to ensure that we can continue to meet customer needs in the future."

"With our fully integrated business capabilities, Dow is well positioned and very committed to support Emulsion Polymers into the carpet market with high-quality products and reliable services," added Cindy Elliott, commercial director - Americas, Dow Emulsion Polymers. "We will continue to invest in product innovation and world-class production and supply capabilities to better service our customers on a global basis. As our margins have come under severe pressure, price increases are a difficult but necessary step to ensure we remain viable and can make these investments."

Percossi explained that styrene and butadiene account for a large portion of Dow's costs in emulsion polymers, noting that prices for these materials have approximately tripled since the beginning of 2002 and thus impairing the company's ability to invest in necessary technical resources. "It is critical for Dow to restore margins so we can respond promptly to market changes and meet market needs in the long-term," he said.

Dow noted that it has worked vigorously to mitigate the impact of high feedstock costs on its customers. The additions of nine co-generation facilities and improved manufacturing processes have reduced energy consumption by 30 percent per pound of product produced over the past 12 years. Dow expects a further 9 percent reduction in energy consumption by 2005.

In a written statement, the company vowed to continue to take action to offset higher feedstock costs, including a reduction in cost structure. Nevertheless, Dow said, the magnitude of feedstock price spikes in recent months -- on top of the consistently high prices of recent years -- means that some of these price increases must be passed along to customers.

To date, a substantial number of manufacturers in the United States have announced price increases due to higher energy and feedstock costs.