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Dow Corning's Platinum Index Pricing Strategy Meets With Success

Published on 2007-01-10. Author : SpecialChem

MIDLAND, Mich. -- Dow Corning Corporation, a leader in silicone technology for the global pressure sensitive industry, took a bold new tack in the battle against rising platinum prices last July when it implemented an innovative index-based pricing system for its global pressure sensitive product line.

Now, six months later, Dow Corning says the strategy has successfully allowed the company and its customers to better manage swings in commodity platinum metal pricing, which has more than tripled since 1999.

Dow Corning's model, based on a quarterly average platinum metal cost index, establishes a base product price and then separates out the commodity portion as a discrete line item. Index-based pricing is common to many industries that are sensitive to commodity costs.

"Index-based pricing provides transactional transparency -- customers clearly see that Dow Corning is not using the price of platinum for financial gain," explains Norm Kanar, Americas marketing manager for Dow Corning's Pressure Sensitive Industry. "If the cost of platinum goes up, it's reflected in the price. But when the cost goes down, we pass those savings along as well." Kanar adds that, as a case in point, Dow Corning plans to reduce the platinum component of its product pricing in Q1 2007 to reflect recent declines in the cost of the metal.

The shared risk and reward of index pricing is just one way that Dow Corning has been very effective in supporting the pressure sensitive industry. The company offers many products and capabilities to help customers reduce their platinum needs.

For example, Dow Corning's Syl-Off® Advantage Series Solventless Silicone Release Coatings require less platinum catalyst to achieve good cure than conventional coatings. In fact, the company's newest additions to the Advantage Series line have the lowest platinum requirements in the industry, offering good cure at platinum levels as low as 25 ppm. In addition to reducing platinum requirements, the Advantage Series also provides improved line speeds and more efficient release performance control. Customers worldwide have responded enthusiastically: over 60 coaters in 20 countries now run Advantage Series products on their lines.

Source: Dow Corning

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