Chemical monitor: August 2005

Selling prices in the chemical industry showed a significant upward movement in May. The latest price indices recorded a rise for intermediate products that was above the recent average.

During May the average rise in chemical prices was 0.5%, following a drop of 0.1% the previous month. The underlying trend has also shown signs of speeding up, with prices increasing by 7.2% compared with the previous 12 months. In particular, prices for intermediate products advanced by 1.6% in May and by 11% on an annual basis.

However, the trend for pharmaceutical prices dropped by 0.5% in May, having fallen by a similar percentage in April. Compared with one year ago, pharmaceutical prices have declined by an average of 2.4%.

The increase in selling prices was not surprising, particularly as production costs have moved ahead on a broad front. For some time there has been pressure on margins for certain chemical manufacturers, and some leading firms have taken advantage of the growth in demand to raise their prices to recoup their higher costs.

Fuel costs moved up markedly during May, averaging an increase of 1.7%, while certain imported products were also higher. In particular, imported chemicals advanced by 0.5% in May, while imported metal rose by an average of 0.3%.

Chemical costs increased by an average of 0.6% in May against a fall of 0.5% in April. As a result, total costs have advanced by 10.7% on an annual basis for the industry as a whole.

Costs for intermediate products showed an increase of 0.6% in May and were 12% up on one year ago. The trend for pharmaceutical costs was also higher, with a rise of 0.5% in May compared with a fall of 0.5% in April. However, the underlying trend for pharmaceutical costs was still subdued, with an average gain of 3.5% compared with that of 2004.