Chemical monitor

Selling prices in the chemical industry have been fluctuating and showed a downturn recently.

During July, the index for chemical prices dropped by 0.2%, following a static trend in the previous month. The longer term trend was also quite subdued and recorded an increase of only 0.5% compared to a year ago.

Competition in the chemicals sector has become tougher in the UK. A major factor has been the slow down in chemical activity, following the slow down in the British economy. This trend has been particularly noticeable for bulk chemicals, where competitive pressures have been intensifying.

In the case of organic chemicals, their prices dropped by 0.2% in July and they were down by 1.7% compared to a year ago. Prices for dyes and pigments also eased, though inorganic products continued on their upward trend, showing an increase of over 12% on an annual basis. For pharmaceuticals, prices were relatively stable.

Falling production costs also had an influence on selling prices. They dropped by 0.2% in July compared with an increase of 0.2% in June while they have increased by 1.1% compared to the corresponding period in 2000. Production costs for pharmaceuticals were unchanged in July but there was a fall for intermediate products of 0.3%.

It is likely that conditions in the British chemical industry will remain volatile for the time being, especially as the UK economy is expected to slow down considerably in the second half of the year.