Chemical Monitor - cost and price indices for April 2006

Prices for some chemical products have risen steadily in response to sustained demand in this sector. As a result, short-term profit margins have shown gradual improvement, compared with the pressure they were under 12 months ago.

During April, the price index for major products in the chemical industry advanced by 0.5% in value, having risen by a similar percentage in the previous four weeks. On an annual basis, chemical prices have been fairly steady and showed an increase of 4.6% compared with a year ago.

Certain items recorded a sharp rise - notably glues and gelatines, which jumped by 3.5% in April. Small gains were also recorded for inorganic chemicals and pigments. However, pharmaceuticals have remained stable, with prices barely moving in recent months.

In contrast, raw materials and fuels costs fell by 0.9% in April following a small rise of 0.1% in March. On an annual basis, the index of chemical costs was considerably higher, recording an increase of 9.2% compared with April 2005.

Costs for intermediate products fell by 1.1% in April as against a rise of 0.2% in the previous month. However, they were up by 11.4% compared with 12 months ago. For pharmaceuticals, costs dropped by 0.1% in April following a gain of 0.2% in March, while the underlying trend was relatively stable, with a gain of 5% on an annual basis.

Several factors have influenced the cost index recently, particularly the movements for crude oil and fuels. The cost of fuels, excluding oil, dropped by 6.5% in April, though crude oil has gone up by 10.6% recently. Imported raw materials were also lower, declining by 0.6% in April but the trend for other imported products has been higher, especially for metals.