Huntsman raises prices 25%

Salt Lake-based Huntsman Corp., the fourth-largest U.S. chemical maker, is raising prices for ethylene and derivatives as much as 25 percent after energy and raw-material costs surged following Hurricane Katrina, Chief Executive Peter Huntsman said.

The company is most affected by higher costs for raw materials derived from natural gas, including ethane, propane and butane, Huntsman said Monday in a telephone interview. He has met with more than 400 customers as the company boosts prices for all products.

Prices for ethylene and derivatives such as polyethylene, the world's most-used plastic, and ethylene glycol, used in antifreeze, must increase 20 percent to 25 percent to keep pace with raw material costs, Huntsman said.

Dow Chemical Co. and DuPont Co. last week announced higher prices, in part due to supply disruptions caused by the Aug. 29 hurricane.

"These are historically high prices," Huntsman said in the interview. "Unfortunately, these are nowhere close to historically high margins" for chemical company profits, he said.

Downstream products such as epoxies and urethanes do not need to increase as much as basic chemicals, for which raw materials comprise 80 percent of the finished cost, he said.

U.S. natural gas has more than quadrupled since 1999. Gas futures on the New York Mercantile Exchange surged 14 percent Monday to a record $12.663 per million British thermal units on forecasts that Tropical Storm Rita will strengthen into a hurricane and impede efforts to restore production in the Gulf of Mexico after Hurricane Katrina.

Ethane has almost tripled to 79.3 cents a gallon from a 1999 average of 27.8 cents.

Separately on Monday, Huntsman Corp. announced that its Huntsman Advanced Materials LLC subsidiary has completed the partial redemption of $25 million in aggregate principal amount of senior secured floating rate notes due 2008.

The partial redemption was made at a price of 105 percent of the principal amount plus accrued interest.

Also, Huntsman International LLC has voluntarily prepaid $50 million in U.S. dollar equivalents under its senior secured term loan facility, utilizing proceeds from the company's recently expanded accounts-receivable securitization program.

Kimo Esplin, executive vice president and chief financial officer, said Huntsman has cut its debt by about $450 million since December.

Contributing: Deseret Morning News

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