WYANDOTTE, Mich. (Aug. 4)—BASF Corp. is implementing a surcharge for its methylene diphenyl diisocyanate products in the U.S., Canada and Mexico, following unprecedented increases in benzene costs that it said have tripled in the first seven months of the year.
In addition, the strengthening global economy has strained BASF's production capacity. Existing plants are sold out on a regional and global basis, said Lawrence Berkowski, director of the firm's Urethane Chemicals business in North America. There has been insufficient reinvestment in MDI capacities over the last several years because of unsatisfactory returns, he said.
The surcharge on MDI, which went into effect Aug. 1, will be 0.5 cents per pound for every 10 cent per gallon increase in benzene cost over the base price of $1.50 per gallon, using the prior month's Dewitt benzene price settlement, the firm said.
In August, the surcharge will amount to 8 cents per pound, corresponding to July's benzene price of $3.10 per gallon. With August benzene approaching $4 per gallon, BASF's surcharge for MDI could reach 15 cents per pound in September, the firm said.