Tokyo – Denka Performance Elastomer (DPE) is looking for price-increases to offset rising costs for crude oil-derived feedstock costs, according to Japanese parent group Denka Co. Ltd.
In particular, DPE aims to counter a “surge in prices” for butadiene, in ongoing negotiations with clients signed up to long-term price formula contracts, Denka said in a 7 Nov financial statement.
The target is “to upwardly revise product prices and reclaim profitability,” said the group, adding that costs of raw materials for its acetylene-based chloroprene rubber (CR) were rising.
“Taking this into account, we have decided not to downwardly revise product prices despite a fall in butadiene price since October,” said the synthetic rubber maker.
Denka, meanwhile, expects to see a major expansion of CR production capacity by a competitor producer.
“For fiscal 2019, we expect the completion of expanded CR production facilities in Germany to yield a 7,000 tonne increase in overall annual production capacity," the group stated.
“We believe that burgeoning demand will soon catch up to growth in our supply capacity and force us to operate amid a tight supply-demand balance,” added Denka.
The group, meanwhile, expects earnings from its CR business in fiscal 2019 (ended 31 March 2019) to also benefit from the resolution of production issues at DPE’s US plant in LaPlace, Louisiana.