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SDK Raises Polychloroprene Synthetic Rubber Price

August 2, 2004

Showa Denko K.K. (SDK) has reached agreement with customers in Japan concerning the revision of price for polychloroprene synthetic rubber. SDK proposed a ¥25 per kilogram raise in March 2004 and, after a series of discussions, obtained, at the end of July, almost all customers’ approval for increasing the price by 80-90% of the proposed amount.

The price of butadiene, the main raw material for polychloroprene, rose 40% during the period from March 2002 to March 2004, reflecting the tight demand-supply situation in the world. This rate of increase is substantial as compared with the 25% increase in naphtha price in the same period.

SDK worked hard to reduce costs to cope with the situation, but the butadiene price increased so rapidly that it became impossible for SDK to fully absorb the increase by its own efforts. Thus, SDK had no choice but to ask its customers to bear part of the increased cost.

The present butadiene price is 33% higher than the price in March 2004 and 90% higher than the price in March 2002. There is a possibility that butadiene supply becomes even tighter, making it more difficult to secure butadiene for the production of polychloroprene.