How do you calculate a carbon black price escalation clause using the PPI?
Divide the current value of BLS series WPU06790918 (Carbon Black) by its value at contract signing, then apply that ratio to the carbon black part of the price. Over the 12 months to September 2026 the ratio was 1.039. A usable clause also names an averaging window, a rule for revised values and missing months, and a cap.
A carbon black escalation clause indexes the portion of the contract price tied to carbon black to a published series instead of fixing it at signing. The benchmark is the BLS producer price index for Carbon Black, series WPU06790918.
Carbon black is a real input cost in tire and rubber reinforcement, plastics pigment, and coatings and inks work. Its price can move further over a contract term than a fixed-price contingency is built to absorb, so indexing it moves that risk onto the published series instead of onto one party.
What's specific to carbon black
Carbon black is made by burning heavy oil feedstock under controlled conditions, so oil is a major input. Feedstock price changes reach the index after a delay. A clause on this series should allow for that delay in its averaging window.
Carbon Black, All Processes against the WTI crude price, both set to 100 in the first month they share
Sep 2026WPU06790918 198WTI crude price 185
Sources: WPU06790918 (Carbon Black, All Processes); EIA via FRED, MCOILWTICO.
Since 2017, this index has followed the WTI crude price about 3 months later and moved about a third as far as it over a year.
Over the 12 months to Sep 2026, the WTI crude price rose 52.1% and this index rose 3.9%.
3 months
Lag behind the WTI crude price. Monthly changes line up best this far apart.
−12.5% to +66.7%
Range of 12-month changes since 2017.
18%
Share of months that moved more than 3%. The median month moved 1.74%.
Because the index trails oil, a seller is paid late in a fast oil rally, and a buyer keeps paying the higher price after oil falls. The length of the averaging window sets how large that mismatch gets.
The calculation, step by step
Base index value. The index value at the base period, usually the month of contract signing or bid submission.
Current index value. The index value at the adjustment date, usually the month of delivery or invoicing.
Ratio. Current value divided by base value.
Adjustment. Apply the ratio to the portion of the contract price tied to carbon black only.
Take a contract signed in September 2025 with $95,000 of carbon black scope, invoiced in September 2026.
Base index, Sep 2025
567.788
Current index, Sep 2026 (revisable)
589.932
Ratio, 589.932 ÷ 567.788
1.0390
Amount at signing
$95,000
Adjustment added to that amount
+$3,705
Live figures from the stored series, updated when the provider publishes. Sep 2026 can still be revised, so a clause should say whether the invoice uses the first published value or is trued up later.
Where clauses go wrong
BLS publishes other series a carbon black clause could be read against, and they do not move together. A clause that only says "the carbon black index" leaves the two sides to pick different ones.
Over the 12 months to Sep 2026, these series moved differently. On the same $95,000, the gap between the highest and lowest is $59,098.
Synthetic Rubber, Including SBR and Ethylene Propylene
+9.6%
+$9,145
Write the series code, WPU06790918, into the contract text, with the BLS title next to it.
No rule for revised valuesBLS can revise each value for 4 months after it is first published. Right now that covers Jun 2026 to Sep 2026. Say whether the first published value is final for invoicing, or whether invoices are trued up once BLS revises it.
Divide the current value of BLS series WPU066 (Plastic Resins and Materials) by its value at contract signing, then apply that ratio to the resin part of the price. BLS also publishes thermoplastic, thermosetting and finished plastic products series, so naming the exact one matters more than usual.
A working escalation clause needs six defined terms: the named index series, the base period, the averaging window, the publication-lag treatment, the review frequency, and a cap or floor. A template that leaves any of those as vague language ("the applicable index," "as published") is where disputes start. Below is a skeleton with each term marked for the specific values a real contract needs to fill in.
Publication lag is the gap between the period an index measures and the date the statistics agency releases that number. BLS PPI data typically publishes within about two weeks of month end, commonly ten to fifteen days. If a clause does not name which release to use, both sides can end up applying different numbers on the same adjustment date.