Dow Chemical unfazed by higher energy costs

NEW YORK: Dow Chemical Co barely blinked at rallying energy costs in the fourth quarter as it tapped fixed-cost supplies from the Middle East and boosted customer pricing by 10 percent.

The largest US chemical maker said the higher prices offset $685 million in higher costs for crude oil and natural gas, the building blocks for many of the plastics and paints that are Dow's breadwinners.

Shares rose 1.8 percent in premarket trading.

Dow's joint ventures, including Kuwait-based MEGlobal and Equate, guarantee it fixed pricing for some of its raw material supply. Even as energy prices rise around the world, Dow's own costs remain relatively low and it is able to still charge the market rate.

Sales in the company's lucrative plastics business, which relies heavily on crude supplies, rose 20 percent to $2.9 billion.

Dow's resilience in the face of high prices stands in contrast to rival DuPont, whose profit was dented by higher raw material costs.

Several of Dow's businesses, including electronic and specialty materials, also make specialized products highly in demand, allowing the company to easily pass along higher costs. Apple Inc, for instance, uses Dow's products to make the iPod.

"The pricing is being set by the higher-cost crude oil link. Dow's feedstock costs are flat in these low-cost areas and crude oil prices are ripping," Alembic Global Advisors analyst Hassan Ahmed said. "That stands to benefit them."