BASF raises prices for second time in three months

By Shane Starling

- Last updated on GMT

Related tags Cost Basf

Giant German supplier BASF has increased the price of propionic
acid for the second time since May as energy and raw materials
costs continue to spiral.

Propionic acid is used in the manufacture of synthetic vitamin E and a BASF spokesperson said he could not say for certain whether the price hike would be passed dcown the chain and affect the price of vitamin E. "We cannot at this point what will happen," he said, "but we have discussed these price rises with our clients all the way and they know further price rises are possible in the current climate."

The rise comes on the same day fellow German supplier Symrise announced an across-the-board increase in its prices due to cost pressures.

Others such as DSM, Borregard, Cognis, National Starch and Croda have pushed their prices up recently to reflect the new climate of input costs.

The rising cost of oil and gas are affecting all industries leading to swelling transportation inputs, running costs as well as raw materials costs in some cases.

BASF would not reveal the spot price of its propionic acid but stated it had raised the price €80 per metric ton in the EU and $130 per ton in North America and Asia.

"Due to the unprecedented increases in the cost of raw materials, energy and transportation, BASF is forced to raise its prices for propionic acid and mixtures based on propionic acid again after a first announcement in May 2008," BASF said in a statement.

Propionic acid is used as a basic material in the syntheses of vitamin E and is also used in feed grain preservation.

In this area BASF says propionic acid, "is much more eco-efficient than feed grain preservation by means of drying or storage in air-tight silos."

The vitamin E food supplements market suffered dwindling sales after a 2005 meta-analysis suggested antioxidants were ineffective, but has recovered to the point where may be robust enough to accommodate price increases, the most recent of which was taken by Cognis.

BASF markets propionic-acid-based preservatives under the trade names Lupro-Grain and Luprosil and produces the ingredient at facilities at Ludwigshafen, Germany and Nanjing, China.

CP Kelco, FMC Biopolymer, Novozymes, ADM, Cargill and Danisco have also raised prices for ingredients ranging from letter vitamins to sugar molasses and citric acid.

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