Orion Engineered Carbons is implementing a carbon black oil index surcharge for its sales into Europe. Since its formation, Orion has been committed to being a stable and reliable partner to the rubber industry in providing the highest quality rubber carbon blacks at competitive prices. In order to continue this commitment when facing today’s extraordinary energy market developments, Orion is introducing this surcharge to supplement its existing formula priced agreements for all rubber customers in Europe.
Due to the impact of energy market developments, current carbon black sales prices no longer adequately cover Orion’s variable costs of production. For the sake of long-term stability, Orion has to address these developments that have not been anticipated in the current prices.
Orion established its existing carbon black pricing agreements with a view to passing along the carbon black oil (CBO) and other energy related costs to its customer base. This pass-through is based on a defined pricing formula which comprises a base price plus a raw material adjustment to cover the consumption and the CBO procurement cost.
Orion believes this pricing mechanism has been beneficial for the customer base since it provided high pricing transparency and (under regular market conditions) fairness in monthly price adjustments. However, over the last nine months, Orion has had to pay significantly more for the procurement of the required high quality CBO in Europe.
March 10, 2016