Chemical monitor

Production costs in the chemical industry have been variable and showed a downward trend in the last month. This fall was a result of lower prices for crude oil as well as for certain raw materials and metals.

During March, total costs for fuel and materials dropped by 0.4% having been stagnant in the previous month. Moreover, the underlying trend has been slowing down, with costs on a yearly basis increasing by 3.2% during this period.

In the case of intermediate chemicals, their costs declined 0.7% in March following a fall of 0.1% the previous month. Compared with a year ago, costs in this sector were up by 4.2%, with an above average increase in inorganic products. For pharmaceuticals, their costs declined by 0.2% in March compared with a rise of 0.2% in February, while the average increase on a 12 monthly basis has been 2.4% in the sector.

Several factors have led to this fall particularly the decline in crude oil prices. They fell by 8.2% during March, mainly due to lower demand for oil as a result of a slowdown in world trade.

A major factor has been the slackening in trade activity in the US, which has had a major impact on global trade, particularly in western Europe.

In the case of chemical prices, they remained stable, despite the fall in production costs. In fact, they moved up 0.1% in March, having risen by a similar increment in February.

Evidently, margins in the chemical industry have improved, with price rises exceeding costs by 0.5% in March.