Chemical monitor

Selling prices in the chemical industry have shown little change recently, apart from a small increase in prices for certain intermediate chemicals in recent months.

During November, the overall index for selling prices was unchanged, following a stable month in October. Compared with a year ago, the index is down by an average of 0.4%. On the whole, chemical companies have been reluctant to push up prices in view of increasing competition in the UK chemical industry.

Pharmaceutical product selling prices barely moved in November, although they were up by nearly 2% compared with year ago. Intermediate chemical prices rose by 0.1% in November compared with a fall of 0.2% in the previous month. On average, intermediate products have advanced by 1.5% on an annual basis due mainly to higher prices for inorganic chemicals.

The chemical industry has benefited from lower production costs, which were down 0.2% in November, having fallen by a similar rate in October. Compared with a year ago, the index for fuel and raw materials has dropped by an average of 2.9% and this trend has helped to boost margins on certain chemical products .

The cost of intermediate products dropped by 0.6% in November and by 5.3% on an annual basis. For pharmaceuticals a small rise of 0.1% was reported in November, but they were down by 0.6% compared with the corresponding period in 2000.

Fuel cost trends were mixed: electricity and gas prices rose by 5% in November mainly due to seasonal factors, while crude oil prices were nearly 4% lower. However, this trend has been reversed recently as a result of cutbacks in oil production. Prices for imported materials were lower by 0.9%.

Profit margins in the chemical industry have improved gradually, despite intensifying competition in the UK. Profitability could increase further, though much will depend on production costs, especially crude oil prices.