Buyers say prices chemicals fell further in December as purchasing went into a tailspin. In fact, PURCHASING'S index tracking chemicals transaction prices (1992=100) slipped to its lowest level since May 2000 while the index tracking plastic resins prices dropped to its lowest level since July 1999. Results of recent buyer surveys and comments from industry sales executives agree that demand appears to have stabilized at trough levels, but they see little indication that recovery is at hand. "Industry conditions at the end 2001 were about as bad as they could get because of both demand weakness and excess capacity," says Pedro Reinhard, a vice president at Dow Chemical. With demand expected to be lukewarm for some time to come, he agrees with buyers that prices will be stable until a major inventory reduction is acheived. Buyers surveyed by PURCHASING suggest that prices paid for industrial commodities will continue to fall for the first four months of 2002 and will barely increase for the balance of the year, resulting in only a slight change in prices paid.

Purchasing of electronic chemicals declined 15% last year, which took pricing down as well. With demand expected to be weak again this year, buyers expect flat pricing until 2003.