Rising energy costs impact market prices
Staff -- Purchasing, 2/6/2003 2:00:00 AM
Transaction prices for commodity chemicals increased for the fifth straight month in January, boosting the weighted price index (1992=100) to 136.9 from 133.9 in December—and the highest index number since 137.5 recorded 21 months earlier in April 2001. On the other hand, the price index for plastic resins slipped for the third consecutive month to 127.2 in January from a revised 127.4 in December. Buyers report that chemical prices have been very erratic in recent weeks, due mostly to the rapid escalation of feedstock energy costs caused by crude oil shortages and an unexpected spike in natural gas costs. Note: The magazine's index of energy costs in January was the highest since May 2001.
Demand recovery faltered in the third quarter, taking away any fledgling pricing leverage in most markets, while fourth-quarter 2002 results are likely to show that the end-of-the-year run-up in oil and natural gas prices has taken a disastrous toll on industry margins. So, the January poll shows that buyers expect prices to climb even higher for certain chemicals in coming weeks. Suppliers of hydrogen peroxide, acetone, glycerin and methanol, especially, all are looking for price increases in the first quarter, citing increasing energy, insurance and feedstock costs. Methanol prices have surged in the past month, in fact, due to supply constraints caused by the general strike in Venezuela, which has crippled production of crude oil and petrochemicals. Styrene buyers should take note of a recent report from market research firm CMAI, which forecasts increased demand for styrene in 2003 causing tightening supply and higher prices.
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