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Letter to customers concerning DSM Powder Coating Resins EMEA price increases

Zwolle, NL, 24 Feb 2011 01:00 CET

Dear Sirs,

As you are aware, a continuing escalation of feedstock prices has created a need for a number of powder coating resin price increases since Q2 of last year. Our latest price increase, which was announced earlier this month, is effective March 1st or as contracts allow. Our delays in passing on these feedstock costs, as we try to absorb some of the impact, dilute further already too thin margins culminating over this period in unviable profitability. Unfortunately, looking at the feedstock situation we expect feedstock will at times continue to be tight or even short over the coming months as well as continuing to increase in price.

Currently our factories are full to their current manned capacities. There is more iron capacity available and this will be brought back on line via increased manning as and when margins make it economical to do so. In the meantime, we will be increasing prices on some of our existing packages of business, over and above the raw material increases, where they have fallen out of line in pricing and profitability. This is of particular concern for some of the smaller pieces of business where over the years feedstock increases have not been fully recovered and/or the business has shrunk in size.

I appreciate this is an unwelcome message but to ensure our business can continue with sufficient profitability for re-investment and to continue to support and supply the powder coating industry we believe we must take these actions.

Your DSM Account Manager will shortly give you details of those products you currently buy where the price will be increased to re-align their margin.

With kind regards

Bert Bakker
Business Director EMEA
DSM Powder Coating Resins