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Orion to add oil surcharge

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LUXEMBOURG—Orion Engineered Carbons S.A. will introduce a carbon black oil index surcharge for rubber carbon blacks sold into Europe, effective April 1.

The move is in response to continuing volatility in the energy markets, said Luxembourg-based Orion, noting that the surcharge will supplement its existing formula-priced agreements for all European rubber industry customers.

Due to the “impact of energy market developments ... current carbon black sales prices no longer adequately cover Orion's variable costs of production,” the company said.

This, it added, had not been anticipated in the price formulas used for rubber carbon black sales.

The firm designed its existing carbon black pricing agreements to pass along the carbon black oil and other energy-related cost to its customer base.

This pass-through is based on a defined pricing formula, comprising a base price plus a raw material adjustment to cover consumption and CBO procurement cost.

However, over the last nine months, Orion has had to pay significantly more for CBO in Europe.

The price development of light fuel oil as an underlying index no longer reflected the CBO purchase price development in Europe, the company said.