Chemical monitor

Production costs have been steady, which is an encouraging trend given the fluctuations in the price of crude oil and other fuels. During February, the overall index was static, which compared with a 0.2% fall on the previous month. However, the underlying trend moved higher, rising by 3.8% over the year.

Pharmaceutical costs were 0.1% ahead of the January figure at 0.2%. For intermediate chemicals, the costs dropped marginally by 0.1%. This was on top of the 0.7% fall seen in January. While this fall is welcome the figure is still 5.2% higher than 12 months ago.

There is also concern over the volatility in crude oil prices, which went up by 9.6% in February. That said, in the last few weeks the price trend has been downwards.

It is expected that certain materials will rise in the short term as a result of the strength of the dollar.

For chemical selling prices, there was a small increase of 0.1% in February, which means a total increase of 2.0% compared with 12 months ago.

For pharmaceutical prices, most products were largely unchanged. On average, prices rose by 0.7% in February which is only 0.1% higher compared with a year ago.

Costs and prices in the chemical sector will probably show more fluctuations in the coming months. A major factor will be how sterling performs. It could suffer some weakness in the medium term.

However, price increases will be selective, especially as the demand for chemicals in the UK is likely to slacken.