The move to increase prices by the key textile dye suppliers Clariant, Dystar and Huntsman has been caused by tight supplies of key raw materials and intermediates from China after production plant closures due to environmental penalties from local authorities. In addition, there has also been a big VAT rebate taken up by the Chinese government which has further hurt chemical companies supplying the dye industry.

“This price increase has become necessary in reaction to continued high crude oil, energy and transportation costs; sharply rising raw material costs caused by the removal of certain preferential export tariffs in China from July 1, 2007; and the limited availability of key raw materials from China, caused by the closure of certain production plants to alleviate the environmental impact”, said Michael Effing, Vice President and General Manager Europe, Middle East and Africa for Huntsman.

Huntsman Textile Effects announced this week that it will raise the price of its textile dyes by 10 – 20% in the Europe, Middle East and Africa, while DyStar has raised its price of dyes and a number of textile and leather auxiliaries by 10 – 30%. Last week Clariant announced price hikes of 15 – 30% in its textiles, leather and chemicals division, in pigments and additives as well as functional chemicals. The price increases vary for example between 10 to 30% for specific dyes or 10 to 15% for optical brighteners depending on the product, respectively 5% for Chinacridones or 15% for lacquered pigments.

Some observers now fear that the Chinese government may have unwittingly exacerbated the situation in the short-term by forcing some manufacturers supplying the domestic market to use cheaper, unregulated dyestuffs which are known to have a detrimental effect on workers and the environment.

“However, the prices of Chinese manufactured products sold in China will be less affected because there will be no effect of this VAT rebate retraction,” noted one industry insider.