Chemical monitor
Production costs for the British chemical industry were fluctuating and have continued to show a downward trend recently. In particular, certain imported material prices were lower, especially metals.
In August, the index for fuels and raw materials used in the chemical industry dropped by 0.2%, having already fallen at a similar rate in the previous month. Compared with a year ago, the trend was static and overall costs were little changed, although there were some variations for individual products.
Costs for pharmaceuticals were stable in August, following the trend of recent months. However, costs for intermediate chemicals fell by an average 0.1% following a decline of 0.2% in July; the underlying trend compared with 2000 was up by only 0.2%.
Prices for some fuels were higher in August but crude oil showed little change. A significant fall was reported for raw materials, especially for certain imported products. Costs of imported metals were markedly lower, falling by 2.7% in the year to August.
The outlook for chemical costs is very uncertain, especially following the terrorist attacks in the US and the prospects of all-out war in some parts of the world. The global economy is already in a dire state and could suffer a prolonged recession, especially in the US. On balance, this recession may lead to falling commodity prices, with the cost of crude oil leading the downward trend in the coming months. However, OPECmay dampen this.
Selling prices in the chemical industry continued to be easier and fell by 0.1% in August, following a drop of 0.2% the previous month. Demand for chemical products is believed to be slowing down and trading conditions are becoming tougher in the UK and overseas.
Prices for pharmaceuticals have been static for some time and were unchanged in August. However, the downward trend for dyes and pigments continued, falling by 1% in August, while a slight drop in intermediate prices was seen.
Prices could ease further as demand for chemicals will remain unstable. In particular, selling prices for heavy chemicals could be under pressure in the coming months and will be adversely affected by the slackening trading conditions in the chemical sector.