Chemical monitor: May 2006

Selling prices in the chemical industry have fluctuated considerably over the past six months but have slowed down recently, reflecting more stable costs of fuels and raw materials.

In February the price index for the chemical sector increased by only 0.2% as against a rise of 1.4% the previous month. The underlying trend has also been slowing, with an increase of 4.2% on an annual basis.

Prices for pharmaceuticals were stable in February following an increase of 0.2% in January. Moreover, the longer term trend has also been relatively stable, rising by only 0.5% in value. Prices for intermediate chemicals rose by 0.4% in February following a jump of 2.8% in January, while a gain of 9% was reported on an annual basis.

The chemical industry has benefited from a slackening trend for chemical costs. The rise in costs for raw materials and fuels was limited to 0.1% in February following a rise of 0.8% in January, but chemical costs were still up by 11.2% compared with February 2005. The trend for intermediate costs

stabilised at +0.2% in February as against a rise of 0.8% in the previous month, resulting in a gain of 13.3% on an annual basis. Pharmaceutical costs moved up by 0.3% in February and by 4.6% on an annual basis.

Oil prices fell by 2.7%, although they were up by more than 40% on an annual basis. Other fuels have also been slightly easier, declining by 0.6%, but imported chemicals were up by 0.3%, while costs for imported metals went up by 1.8% in this period.

Over the next few months prices in the chemical industry are expected to be more stable and to show limited changes. However, much will depend on the trends for chemical costs, especially with regard to oil prices; should these start to rise again they would put added pressure on some chemical manufacturers.