Chemical monitor

Total costs in the chemical industry have continued to rise and even accelerated for certain items. This trend was mainly due to a sharp increase in the price of fuels, particularly oil. Moreover, profit margins for many chemical companies have been under some pressure, as they have not been able to raise their selling prices sufficiently in order to recoup their higher costs.

In December 2002, total chemical costs went up by 0.3% having already risen by 0.2% the previous month. And although the annual trend was still subdued - up by only 0.2% compared with the corresponding period in 2001 - the underlying movement has been gathering pace recently.

Pharmaceutical costs showed a rise of 0.1% in December, the same as for November. However, costs for intermediate chemicals jumped by 0.4% compared with only 0.1% in November, with organic and inorganic products leading the way.

The cost of crude oil rose sharply by 17% in December, while other fuels advanced by nearly 2%. Some raw materials were also higher, especially for the imported chemicals, which went up by 0.5%.

Despite these increases in production costs, the competitive nature of the UK chemical market at present means that firms have been unable to raise their selling prices more rapidly.

Thus the index for chemical prices went up by only 0.1% in December, having been slightly easier in November. Compared with a year ago, prices showed an increase of 0.1% for the sector as a whole.

Most prices for pharmaceuticals remained unchanged in December and were 0.1% lower than a year ago. However, prices for intermediate products were higher, up by an average of 0.3% in December, with organic products leading the upward trend. Compared with 12 months earlier, the index for intermediate prices recorded a gain of 2.4%.