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BASF implements MDI surcharge

By David Reed, UT EditorWyandotte, Michigan-BASF Corp. will implement a surcharge for its MDI (methylene diphenyl diisocyanate) products in the United States, Canada and Mexico, following unprecedented benzene costs that it says have trebled in the first seven months of this year.In addition, “[the] strengthening global economy has strained BASF’s production capacity. Existing plants are now sold out on a regional and global basis … there has not been sufficient reinvestment in MDI capacities over the last several years because of unsatisfactory returns,” said Lawrence Berkowski, director of the firm’s Urethane Chemicals business in North America.The surcharge on MDI, which comes into effect from 1 Aug, will be half a cent per pound for every $0.10 per gallon increase in benzene cost over the base price of $1.50 per gallon, using the prior month’s Dewitt benzene price settlement, a 30 July statement from the firm explained.In August, the surcharge will amount to $0.08 per pound, corresponding to July’s benzene price of $3.10 per gallon. With August benzene approaching $4.00 per gallon, BASF’s surcharge for MDI could reach $0.15 per pound in September, according to a 30 July statement from the firm.The surcharge will remain in effect until further notice and is in addition to the $0.09-per-pound MDI price increase BASF implemented in July.”BASF can no longer absorb benzene price increases in the hope that costs will fall back to the levels of the 1990s,” said Berkowski.”This surcharge is just a small portion of the total cost that benzene has on MDI,” he pointed out, adding that “cost increases for natural gas, nitric acid and chlorine have negatively impacted our results, which we are absorbing at this time.”

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