2009 Price Increase Notification

This has been another challenging year as ELANTAS PDG continues to see price escalation on raw materials coupled with significant availability issues. Most of our raw materials are several steps removed from the oil refining process creating a lag affect in pricing. Despite the recent decline in oil pricing, we have not received any pricing relief from our raw material suppliers. Given the current average price for a barrel of oil remains significantly higher than the 2007 price, we do not anticipate any pricing relief as we head into 2009.

While the price of petroleum is an important factor in our raw material prices, it is not the only factor. Natural oil pricing has been steadily increasing due to the increased demand for ethanol as a gasoline additive. Since crops producing ethanol yield a better return than other crops, demand shortages have been created for natural oils resulting in higher prices. Other basic feedstock materials representing building blocks, like those used in glycols, continue to be in short supply and create upward price pressures due to the supply-demand imbalance. Hurricanes Gustav and Ike further complicated this supply-demand imbalance and had a devastating affect on petrochemical manufacturers in that area. We are not forecasting relief from these supply-demand imbalances anytime soon.

We have implemented process improvements in our plant to contain our costs and mitigate the impact of the constant raw material price increases; however, we simply cannot offset the total impact of these price increases. Therefore, we are increasing our prices effective with all orders placed on and after January 1st, 2009 and shipped after February 1st, 2009. Price increases will vary based on the product chemistry. Detailed pricing for the products you purchase will be forthcoming.

We understand this price increase affects your business, but hope you appreciate our situation. We are committed to maintaining the high quality of service and products you have come to expect. Thank your for your business and we look forward to working with you in the future.