News from Notch Consulting, Inc.

June 26, 2008

Columbian Adjusts Carbon Black Surcharge, Moves from Quarterly to Monthly Contracts

Filed under: Carbon Black — Tags: , , — Notch @ 3:54 pm

On Monday, June 23, Columbian Chemicals issued a press release announcing an adjustment to its previously announced program to add a surcharge to all carbon black products shipped in North America.

The previously announced surcharge of $0.08 per pound, which was implemented on June 1, 2008, will be reduced to $0.06 per pound effective July 1, 2008. Though the surcharge will be reduced, prices will not actually fall, since the surcharge reduction is occurring in tandem with the normal quarterly price adjustment initiated with the beginning of the new quarter on July 1. The surcharge was introduced to close the lag between contract feedstock adjusters (which are determined by the previous quarter’s average price) and actual current feedstock costs. The surcharge will be reviewed again in late July and adjusted accordingly for the month of August.

Columbian also announced that it will move all of its contracts from a quarterly to a monthly price adjustment mechanism to more accurately reflect the rapid changes in raw material costs. Under this monthly mechanism, feedstock price changes — both increases and decreases — will be passed through to the customer the following month. According to the announcement, “The “quarter-lag” is no longer workable in today’s environment.”

Below is a copy of the press release.
columbian-chemicals-press-release-6-25-08

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